Biden must offer student loan relief to defrauded students, say Democrats
- 16 Democrats have urged the Department of Education to forgive student debt for former Corinthian College students.
- Corinthian closed in 2015 over accusations of fraud, but many of its students are still waiting for relief.
- They want an update from the department on the status of these releases and why they are being delayed.
It’s been seven years since a for-profit college closed amid accusations of fraud, and a group of Democratic lawmakers said it’s high time its students got the promised relief.
On Monday, 16 lawmakers, including Massachusetts Sen. Elizabeth Warren and Washington Rep. Pramila Jayapal, wrote a letter to Education Sec. Miguel Cardona requests an updated timeline for when former Corinthian College students will receive student loan forgiveness.
Corinthian closed in 2015 following accusations of borrowers misleading and forcing them to take on unmanageable student debt, but many of those borrowers are still waiting for their loan forgiveness applications to be approved.
The lawmakers wrote that the Department of Education has handled these claims “in a complex and piecemeal manner” that has “delayed help for thousands of borrowers while apparently denying thousands more any help.” .
“For the roughly 350,000 students defrauded by Corinthian, which closed its campuses in 2015, the wait for debt forgiveness has spanned three presidential administrations,” the lawmakers wrote. “ED has failed to deliver on its promise to defrauded borrowers, and it is time to act quickly and broadly to right this wrong,” they added.
Borrower Defense of Repayment – a loan cancellation process for defrauded students – was established in 2015 under former President Barack Obama following a series of school closures caused by allegations of fraud. Corinthian is one of the best-known cases, followed a year later by the closure of the ITT technical institutes.
As Insider previously reported, the Consumer Financial Protection Bureau, along with Senator Warren, were investigating the school on charges of misleading marketing, high student loan defaults, and lying about rates. of graduation.
But while the Borrowers’ defense claims were aimed at redressing the harm schools had done to students, the program has had a 99% denial rate under former education secretary Betsy DeVos, and at that As of today, the department has approved only 107,000 of the 429,000 filed claims, the lawmakers wrote.
Accordingly, they are giving Cardona until April 5 to provide information on the number of Corinthian students who have applied for a discharge of their debt, the reasoning behind the repair delays, and an update on all defense requests. of borrowers filed to date.
Biden still working to reform aid for defrauded borrowers
Given the high denial rate of borrower defense requests under its predecessor, Cardona canceled DeVos’ methodology for calculating relief last March gave only partial relief to defrauded borrowers, and it has since forgiven $2 billion in student debt for 107,000 defrauded students.
But some advocates and lawmakers are still pushing the administration to do more. More recently, the ministry announced additional measures to hold private college owners accountable for the costs when a school closes and locks its students in.
But that fell short of holding the individual leaders of those colleges personally accountable for those costs — something the lawmakers also asked the department to do in their Monday letter.
And on Thursday, the Project on Predatory Student Lending at Harvard, the New York Legal Assistance Group and the Legal Aid Foundation of Los Angeles wrote a letter to Cardona urging him to discharge the debt of students who attended for-profit schools with closing dates prior to 1994, arguing that these students had “suffered years of collection harassment, credit damage, professional license revocations, benefit seizures and other punitive measures” and should be eligible for relief.