Over the past year, the Department of Education has received tens of thousands of applications of student-debt relief from borrowers who say they’ve been scammed by their schools.
The agency hasn’t approved any.
That’s according to data obtained from the Department and released Wednesday by the office of Senator Patty Murray, the ranking Democrat on the Senate’s Health, Education, Labor and Pension committee, which oversees the Department.
Between June 30, 2018 and March 31, 2019 more than 74,000 applications for debt relief have poured into the agency.
As of March 31, 2019, the Department had received 239,937 applications for debt relief from these borrowers with 179,377 applications pending. As of that date, the agency had approved 47,942, a number that hasn’t budged since June 30, 2018. The number of denials also hasn’t increased since the end of June 2018.
But the number of applications received by the Department during that time has continued to climb. Between June 30, 2018 and March 31, 2019 more than 74,000 applications for debt relief have poured into the agency.
Murray derided the Department’s inaction on the claims as “shameful,” in a statement. “There’s nothing stopping Secretary DeVos from approving claims immediately except her apparent disregard for borrowers, and I’m going to keep pushing her to provide students who were cheated or defrauded by predatory for-profit colleges the relief they are entitled to.”
Trump administration critics have derided the Department’s approach to the borrower defense process and say its part of a larger pattern of the DeVos-era agency favoring the interests of for-profit colleges over borrowers. Earlier this year, the agency repealed a rule developed by the Obama administration that aimed to ensure graduates of career training programs — which are mostly at for-profit colleges — were earning enough to pay back their loans.
The data is the latest development in a battle over the fate of borrowers who were scammed by their schools.
The fight over the future of for-profit colleges even made it to the Democratic debate stage in Detroit Tuesday night. In response to a question about why he doesn’t support Senator Bernie Sanders’ proposal to cancel all student debt, South Bend, Ind. Mayor Pete Buttigieg, said if he were to wipe away debt he would “start with the for-profit colleges that took advantage of people, especially veterans.”
“Under President Obama, they were held accountable for whether they delivered results,” he said. “President Trump, under a Secretary of Education who regrettably is from this state, did away with those rules,” he said. “There’s no accountability.”
The data released by Senator Patty Murray exclusively to MarketWatch is the latest development in a years long battle over the fate of borrowers who were scammed by their schools into taking on debt. Under a law, known as defense to repayment, these borrowers the right to have their federal student debt discharged.
But the law, which has been on the books since the 1990s, wasn’t widely used until 2015 when former students of the now-defunct, for-profit chain Corinthian Colleges, organized by activists, began clamoring for relief under the law. That pressure helped to convince the Obama administration to create a more formal process borrowers could use to file claims for relief.
The Department of Education under Secretary of Education Betsy DeVos has tried unsuccessfully to rewrite the rules. The agency and DeVos are also facing a class-action lawsuit from borrowers, accusing officials of illegally stalling their decision on their claims.
Borrowers describe how their debt has prevented them from buying homes, and even delayed marriage or children.
In nearly 900 affidavits submitted as part of the suit earlier this month, borrowers describe how their debt has prevented them from buying homes or cars and delayed major life events, like marriage or children. They allege that for-profit colleges lured them into attending and taking on debt to pay for it with promises of a brighter future. In reality, many say they’re worse off than before they attended.
Liz Hill, a spokeswoman for the Department, wrote in an emailed statement that pending litigation has kept the agency from adjudicating the claims. The agency was sued last year over a plan to use a formula to determine whether some borrowers who attended Corinthian Colleges and filed borrower defense claims might be eligible for a partial discharge of their loans instead of a full discharge.
A federal district court judge ruled last year that the Department’s approach violated the Privacy Act and ordered the agency to stop collections on former Corinthian students while the legal issues are sorted out. The government has appealed that ruling, Hill noted. But with the Department’s process for determining a borrower’s level of harm “held up in court,” Hill wrote, the agency can’t move forward with assessing the claims.
“The Department has a duty to protect students from fraud while also safeguarding taxpayer dollars,” she wrote.