When a federal judge ruled in favor of the Biden administration’s deal to pay off $6 billion in student debt, the progressive activists representing student borrowers hailed the news.
“This decision delivers a massive, long-overdue victory for our clients and validates the fact that this settlement is on solid legal ground,” said Eileen Connor, president and director of the Project on Predatory Student Lending (PPSL).
And the PPSL should be happy, given that one of its lead lawyers is now deputy general counsel for the Biden administration’s Education Department that agreed to the deal.
How can one person be the attorney for both sides of a billion-dollar settlement? That is just one of the many strange twists in this story of progressive political insiders, taxpayer-funded bailouts, and allegations of insider trading.
Last June, the Department of Education (DOE) agreed to automatically forgive federal student loans for some 200,000 students from 151 colleges, mostly for-profit and career colleges. The agency used the little-known “borrower defense to repayment” (BDR) regulation allowing students to claim they were misled when they took out the loans.
“Since day one, the Biden-Harris Administration has worked to address longstanding issues relating to the borrower defense process,” said Education Secretary Miguel Cardona at the time. “We are pleased to have worked with plaintiffs to reach an agreement that will deliver billions of dollars of automatic relief to approximately 200,000 borrowers.”
One of Cardona’s employees was Deputy General Counsel Toby Merrill, who helped oversee the settlement. Merrill’s name also appears on the list of plaintiffs in the Sweet v. Cardona settlement. That’s because Merrill founded and directed the PPSL that filed the lawsuit against the agency. Three months after the filing, the Biden administration hired her. Less than a year after that, the Education Department agreed to a $6 billion settlement with her former organization.
Not surprisingly, that relationship has raised ethical eyebrows from consumer advocates.
“This settlement proposal is a winning lottery ticket for tens of thousands of students who just got the taxpayer to pick up the tab for their tuition, and grifting lawyers and liberal activists who continue to line their pockets by gaming higher education at the DOE and in court,” said Gerard Scimeca with Consumer Action for a Strong Economy, a free-market-oriented consumer advocacy organization.
The Career Education Colleges and Universities (CECU) organization also opposed the settlement, arguing such a sweeping settlement would damage the reputation of all for-profit colleges, the vast majority of which played by the rules and helped students enter the workforce.
“Schools began to see the impact as soon as the agreement came to light,” the CECU’s Nicolas Kent told InsideSources. “We had calls from schools saying that students are asking about backing out [of their commitment to the institution, even though the settlement agreement doesn’t mean there was any wrongdoing [by a school on the settlement agreement list].”
But is damaging the entire career college industry one of the Biden administration’s goals?
Industry advocates note that the PPSL was a progressive project of the Legal Services Center of Harvard Law School, one that targeted its schools. “The Project represents low-income student loan borrowers in litigation against for-profit colleges and against the policies that enable them,” says an Education Department press release announcing Merrill’s hire in July 2021.
While at Harvard, Merrill and the PPSL collaborated with the Debt Collective to “tackle the for-profit college industry.”
The Debt Collective, which credits Merrill for providing the legal underpinnings of its work, was founded by activists who met during the Occupy Wall Street protests. “The group’s goal is to get all private and federal student loans canceled and to make public college free,” reported CNBC.
Last June, the ranking members of the House Committee on Education and Labor and Senate Committee on Health, Education, Labor, and Pensions requested information about a private meeting between the Debt Collective and Federal Student Aid Chief Operating Officer Richard Cordray “to discuss a memo the organization provided on closing private institutions of higher education without congressional authorization.”
“For-profit institutions educate over half of the truck drivers in this country, who are critical partners to addressing supply chain shortages, and these same for-profit institutions graduate 44 percent of all nurses of color, who served on the frontlines of the COVID-19 pandemic,” Virginia Republicans Rep. Virginia Foxx and Sen. Richard Burr wrote. “The evidence that the Department is following the recommendations of an outside memo to dismantle career colleges is deeply concerning. The insinuation that the Department believes it has the authority to take these grievous actions without Congressional approval is downright alarming.”
It appears the Biden administration is following the same policy put in place by the Obama administration’s Robert Shireman, an outspoken opponent of for-profit education. Shireman “waged ideological war” on the schools, according to The Wall Street Journal, with the help of allies James Kvaal and Ben Miller.
Shireman is the founder and former president of The Institute for College Access and Success (TICAS), an organization that lobbies Washington over education policy. Like Shireman, Kvaal served as TICAS president. The two worked together in the Clinton administration, and when Shireman left his job as Deputy Undersecretary of Education in the Obama administration, he was replaced by Jim Kvaal.
As part of the Obama administration, Shireman tried to push through a “gainful employment” rule targeting career colleges that was eventually thrown out by the federal courts. Miller has written articles about for-profit education with Shireman and considers himself a protege. And both Shireman and Miller recruited students to file BDR claims for the lawsuit.
Shireman was forced to leave the DOE after he “was caught during the Obama administration playing footsie with a short-seller betting against for-profit colleges,” according to The Wall Street Journal.
Today, Miller is a senior advisor to the DOE’s Chief of Staff and Kvaal serves as Under Secretary of Education.
You don’t have to be paranoid to see the potential problem with the $6 billion settlement and how it was handled, said Scimeca.
“This type of settlement has long been part of the left’s endgame in their longstanding ideological war against career-oriented, for-profit colleges. Their entire strategy is based on knowing that the claims of fraud from the tens of thousands of plaintiffs they recruited — whether true or not — could never be adjudicated by our wholly incompetent DOE.”
Randall Bloomquist is a veteran journalist who writes about business and industry for InsideSources.
