June, 2019
Washington -- Republic Report has picked up on startling testimony from last month's Congressional oversight hearing on for-profit colleges. I watched the hearing as it was streamed live and was likewise perplexed by the statements of Department of Education official Diane A. Jones about approval of troubled accreditor ACICS. From the Republic Report:
Jones testified that “it was not the [Trump] administration that decided to change the decision of the prior [Obama] administration”; rather, she said, the Department reinstated ACICS because “the courts made that decision.”
But it was the Trump administration. The courts may have required a new determination, but not the outcome. The Jones statement, under oath, is guileful and perjurious. Thousands of borrowers and families have suffered from the decision. As have taxpayers, who will have to pay the bill for the mess left behind. The beneficiaries of the decision are predatory schools and lenders.
This is not Ms. Jones' first brush with untruthfulness. It is a pattern. She is a long-time industry servant in an iron triangle that from time to time captures the Department of Education to put private profit ahead of public mission.
In the previous decade, when Ms. Jones was Assistant Secretary for Postsecondary Education, she attempted to cover up student-loan subsidy fraud in the Department by claiming that there was no way to determine its existence or amount. She told investigator Amit Paley of the Washington Post that the numbers he reported were flawed, after the Post assembled a panel of outside experts to determine how much was involved. "We don't believe meaningful inferences can be made from the data the department provided," Ms. Jones said, to try to deflect attention from the scandal.
This was months after the Inspector General had already documented illegal claims and had made detailed determinations of the amounts involved, which totaled hundreds of millions of dollars and were independently corroborated by the Post's panel of experts.
Reporter Sam Dillon of the New York Times had written on the same subject a few months earlier and interviewed me about the illegal claims and how they were made. I had retired from the department two years earlier and knew much about the matter. The NYT followed up with an editorial against waste and fraud. The next day, Sam Dillon told me later, he went to the Department of Education to confront officials with evidence that some at the department had actually been party to schemes to defraud the government. He had two former deputy secretaries and one assistant secretary in mind. Sam Dillon was so angry, he told me, that he yelled at the officials because they knew of the schemes all along and did nothing. He tried to write another, even harder-hitting story but was rebuffed by his editors, for reasons unknown. Had he only been permitted to do so, the ensuing history of corruption and racketeering at the department may have been curtailed.
In last month's testimony, Ms. Jones was aided in her answers by questions from Congresswoman Virginia Foxx, who made certain the oversight subcommittee was told once again, incorrectly, that it was a court, and not the Trump administration, that forced the disastrous reinstatement of ACICS.
Staffing Rep. Foxx on postsecondary education matters has been Kathleen Smith, formerly of the Department of Education but also a key figure in the government-industry revolving door going back two decades. Ms. Smith was once a lobbyist representing lenders making the fraudulent subsidy claims that Ms. Jones was intent on covering up. Ms. Smith, while a department official in the Trump administration, was more recently instrumental in cutting off information-sharing agreements with the Consumer Financial Protection Bureau and helped lead the ongoing effort to preempt state attorneys general from acting against unlawful student-loan servicer practices. As key staff to the ranking member of the House committee writing the reauthorization of the Higher Education Act, Ms. Smith landed herself in the iron triangle position to write the laws for which Ms. Jones will create and administer regulations.*
Some of the iron triangle activity has come to light as the result of discovery in 2017 litigation. Hugely problematic is the failure of officials to recuse themselves for conflicts of interest, or for violations of recusals. It is compounded by clumsy attempts by the Trump administration to intimidate the Office of Inspector General, especially as it looks at irregularities in the reinstatement of ACICS. Only the willfully blind cannot see the industry-based, revolving-door network that undermines the mission of the department, at huge cost to students, families, and taxpayers.
As Republic Report notes, Ms. Jones is overwhelmingly conflicted by her past dealings with the very parties she is now ostensibly regulating. Unfortunately, recusal abuse at the department is not a new development. It goes back many years and remains unchecked, even though by law it is a criminal offense.
Ms. Jones testified that she wants everyone to have the same educational opportunities she had. But her actions on ACICS have put some 18,000 students deeper in debt with worthless credits to show for it. Congress has a responsibility to rebuke such testimony.
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*The revolving door recently turned again for Kathleen Smith, who has since become the Washington-based lobbyist for troubled student loan servicer PHEAA.
