The Department Of Education Will Cancel $150 Million In Student Loan Debt — But DeVos Didn't Want To
Months after a federal judge ruled against Betsy DeVos' attempt to overhaul an Obama-era borrower defense policy, the Department of Education announced it will cancel student loan debt totaling roughly $150 million. The Department of Education's announcement comes after DeVos spent months attempting to fight the policy.
"To date, the Department has identified approximately 15,000 borrowers who are eligible for an automatic closed school discharge based on their (or in the case of a PLUS loan, their child's) attendance at a school that closed between November 1, 2013, and December 4, 2018," the Department of Education's Federal Student Aid Office said in an announcement published Thursday. "The approximate amount of loans that will be automatically discharged is $150 million."
According to the Federal Student Aid Office, roughly half of those 15,000 borrowers attended a Corinthian College, a chain of for-profit schools that, according to CNN, went bankrupt and closed in 2015 after being fined $30 million dollars for allegedly inflating job placement numbers in a bid to mislead prospective students. Students enrolled at Corinthian Colleges reportedly wracked up approximately $80 million of the $150 million in student loan debt set to be canceled by the Department of Education.
As education secretary, DeVos has long fought to block implementation of borrower defense regulations, an Obama-era policy designed to protect borrowers from debt incurred if their schools are found to have closed or defrauded them. According to Politico, however, a federal judge ruled against DeVos and the Department of Education's efforts to block the regulations from taking effect in September. That same judge later denied a bid to block the regulations raised by for-profit colleges.
At the time, DeVos argued the regulations placed unfair burdens on taxpayers as they were too lenient and did not require borrowers to provide sufficient proof of eligibility. "Under the previous rules, all one had to do was raise his or her hands to be entitled to so-called free money," DeVos said of Obama's borrower defense policy in 2017, as The Detroit News reported.
But a number of lawmakers have hailed the Department of Education's recent announcement as good news. In a statement released Thursday, ranking Senate Health, Education, Labor, and Pensions (HELP) Committee member Sen. Patty Murray said that although she was "pleased" to see the borrower defense rule finally being implemented, she was "disappointed" that it had taken a court order and urged the Trump administration to do more to defend students.
"It's disappointing that it took a court order to get Secretary DeVos to begin providing debt relief to students left in the lurch by predatory for-profit colleges, but I am pleased the Department has finally started implementing this rule and that some of the borrowers who attended school like Corinthian Colleges and ITT Tech are finally getting their loans cancelled," she said. "This is a good first step, but it's not good enough — I call on Secretary DeVos to abandon her attempts to rewrite the borrower defense rule to let for-profit colleges off the hook and instead fully implement the current rule and provide relief to more than 100,000 borrowers who were cheated out of their education and savings."
The Department of Education is expected to begin emailing eligible borrowers on Friday to notify them that some or all of their loans will be discharged.