Biden’s Department of Education Appears to be Weaponizing Fines

One critique of those on the left is that they’ve weaponized the legal and administrative systems against their political opponents. This isn’t necessarily new, or even unique to the left. Republican President Richard Nixon tried to weaponize the IRS to threaten and punish opponents. Decades later, Democrat President Barack Obama did the same. Under Obama’s IRS, former Director Lois Lerner successfully targeted and suppressed conservative non-profits, and former Commissioner John Koskinen later stonewalled Congress and “destroyed evidence subject to subpoena.”

The Biden Department of Education (ED) now appears to be abusing the law to punish political opponents as well. Consider two recent fines levied by the Biden administration, one for $37.7 million against Grand Canyon University and another for $7.2 million against student loan servicer MOHELA. It is possible that there are legitimate reasons for these fines, but both raise numerous red flags and there is a high probability that the Biden administration is weaponizing fines to punish political opponents.

Grand Canyon University

The Biden administration fined Grand Canyon University $37.7 million for allegedly providing misleading estimates of the cost of enrolling in its doctoral programs, specifically for not including the cost of continuing education courses for doctoral students when they are working on their dissertation.

But there are two big red flags with this fine.

First, GCU did include the cost of these courses, and not in small fine print in an appendix, but in big red letters at the top of the cost estimate.  The level of transparency on costs is admirable (and unusual), and the “school’s accreditor, the Higher Learning Commission, praised GCU’s transparency in 2021.” Yet the ED saw this same level of honesty and transparency and issued GCU a record-breaking fine. Strange.

Second, the ED is being extremely selective in issuing fines. The GAO recently found that 91% of colleges obscure or mislead students about the cost of enrolling. Since there are about 4,000 degree-granting colleges, the ED could have fined about 3,600 colleges for similar “crimes,” yet they fined one and only one—Grand Canyon University. And they didn’t levy a nominal fine either, they fined GCU $5,000 per doctoral student.

So what’s really going on? The most likely story is that ED doesn’t like GCU because it used to be a for-profit and is retaliating against GCU because GCU is suing ED. Back in 2018, GCU applied to convert back to non-profit status (it was non-profit from 1949 to 2004, then for-profit from 2004-2018), and was recognized as non-profit by the IRS, their accreditor, and their state. But ED has refused to grant GCU non-profit status, and in 2021, GCU sued ED “when it became apparent ED was unwilling to work with us in good faith and there was no path forward.”

It is possible that GCU should not be recognized as a non-profit. As I testified a few years ago, conversions can be complicated and their approval should not be a rubber stamp. But the Biden administration has lost my trust that it is making an honest and good faith assessment. Progressives within the Biden administration really don’t like profit in the education space and appear to be going full Keyser Soze on for-profit education. The Biden administration reissued gainful employment regulations targeting for-profits while exempting most public and private non-profits. And ED recently attacked online program management providers (OPMs) that often work with public and private non-profit colleges. As Michael Brickman noted, “rather than launching rulemaking, which would allow stakeholders and the public a chance to weigh in on any new regulations, the department simply published a letter that single-handedly shifted the entire OPM landscape.” The GCU fine fits with this pattern of blind, ideologically driven hostility to profit from the Biden administration.


Missouri Higher Education Loan Authority (MOHELA)

ED recently announced a $7.2 million fine against the Missouri Higher Education Loan Authority (MOHELA) for errors and delays in sending students instructions on restarting payments after the more than three year payment pause. This fine raises three big red flags.

First, it is unprecedented. “Withholding payment to a servicer in this way and making the decision public is a first for the Education Department.”

Second it is selective. MOHELA wasn’t the only student loan servicer that struggled to prepare borrowers, yet it was the only servicer that was fined.

Third, the fine rests on the thinnest of pretexts. For example, “servicers are supposed to send bills to borrowers at least 21 days before the payment due date. About 2.5 million borrowers didn’t get their bills on time, with some receiving only seven days’ notice.” Restarting payments after pausing them for more than three years was bound to run into complications. ED is giving students a full year before nonpayment will adversely affect a student who misses payments. Yet for MOHELA, giving students seven rather than 21 days is unforgivable and worthy of an unprecedented fine.

So what’s really going on? MOHELA was at the center of the lawsuit that stopped the Biden administration’s student loan forgiveness attempt (one of them anyway), so the Biden administration is retaliating by fining MOHELA.

This is particularly galling because MOHELA did not itself sue (the state of Missouri did because MOHELA was a state entity and its finances affected the state). Progressives made a big deal about this, saying it should be MOHELA’s choice whether to sue to stop loan forgiveness and since MOHELA wasn’t suing, there was nothing wrong with the loan forgiveness plan. But it was clear that MOHELA (and other student loan servicers) were reluctant to sue because they feared ED would retaliate by revoking or withholding future contracts, or by issuing baseless fines. And that fear is now 100% validated. The Biden administration is going full mob-boss on MOHELA: “nice student loan servicing business you got there, it would be a shame if anything happened to it.” This is a clear warning to MOHELA and all the other servicers to avoid opposing Biden’s many attempts to forgive student loans.

I’ve been warning the Biden administration that it should think carefully before violating norms and standards in the pursuit of short-term political gain. Once one side abuses its power in this manner, the other side may not be able to resist retaliating in kind.

Photo by Dean Howe Photograph Adobe Stock Asset ID#: 244617523


One thought on “Biden’s Department of Education Appears to be Weaponizing Fines”

  1. The only word that comes to mind here is “jaw-dropping.”

    So MOHELA didn’t give the required 21 days notice — but if there are no consequences of late payment, exactly what difference does it make? IF the rules state that there are no consequences for a year — *if* the rules actually state that, what’s the big deal? Pay it 21 days late and no one is going to care….

    And as to Grand Canyon University, I’d love to see UMass Amherst held to that standard. Even on the undergrad level, it’s an open secret that you’re not going to graduate in eight semesters — you’re not going to get the courses you need and want. Unless you pay extra for on-line courses, or pay extra for summer session courses, you will need at least one extra semester and likely two. And as to Doctoral degrees, good luck quickly finding a committee….

    So why isn’t UMass being sued???

    The point about the precedent that Biden’s ED is setting is important — lots of people freaked out about college presidents being called before Congress to be asked about antisemitism — just wait until there is another ED Secretary like Bill Bennett….

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