Senators Elizabeth Warren and Dick Durbin today issued a report giving Betsy DeVos and the Department of Education a failing grade on their handling of claims for loan forgiveness from students defrauded by for-profit colleges and trade schools. Fourteen other Democratic Senators joined Warren and Durbin in a letter calling on the Department to take action to respond to the report's devastating findings: Despite legal requirements that defrauded students receive discharges of their federal student loans, Secretary DeVos's Education Department has not forgiven a single student loan since Trump took office and is sitting on a backlog of 87,000 claims for relief from students. The Department has even failed to discharge loans of almost 2,000 students who were notified by the Obama Education Department that their applications for loan forgiveness had been approved.
Proprietary schools rely on federal student aid programs, especially loan programs, as their lifeblood, and often employ boiler-room tactics to sign students up for programs of dubious or no value to get access to those federal funds. When schools go under from the weight of their own fraud and mismanagement, or when students discover that the degrees they've obtained or the classes they've attended are of little or no value on the job market, it is students who are left holding the bag of unsustainable student loan debt owed to the federal government.
To address this problem, the Higher Education Act has provided for many years that students have a defense to repayment if a school defrauded them or wronged them legally in other ways, and Department regulations provide a process for students to obtain cancellation of their loans, and reimbursement of previous loan repayments, when they are victims of predatory schools. With the wave of disclosures in recent years of fraud and abuse by proprietary schools such as Corinthian Colleges and ITT Technical Institute, requests for loan forgiveness have mounted, and the Obama Administration approved over 30,000 of those requests. Obama's Education Department also promulgated new rules to improve the process and increase protections for students against predatory schools.
Continue reading "Senators Blast Education Department Inaction on Loan Forgiveness" »

