Student-loan borrowers are awaiting action on nearly 100,000 claims that because their colleges defrauded them, they should have their loans discharged, and a top Education Department official said on Tuesday that the agency would begin processing the backlog of claims “very soon.”
During the second session of meetings to rewrite the regulations for the claims process, known as “borrower defense-to-repayment,” James Manning, the acting under secretary of education, told the rule-making panel that “nothing about borrower-defense is easy,” but that several decisions on claims are on the way. Approximately 95,000 applications for debt relief are pending, Mr. Manning said. A majority of those claims are from former students at the now-defunct Corinthian Colleges.
The education secretary, Betsy DeVos, announced in June that the department would revise the Obama-era borrower-defense rule, which was billed as a way to offer a streamlined method for students defrauded by colleges to have their loans discharged.
“Fraud, especially fraud committed by a school, is simply unacceptable,” Ms. DeVos said at the time. “Unfortunately, last year’s rule-making effort missed an opportunity to get it right.”
Department negotiators have echoed that sentiment during the new rule-making session.
‘Borrowers have waited a long time to hear about’ the status of their claims.
“Borrowers have waited a long time to hear about” the status of their claims, Mr. Manning said, adding that the Trump administration had inherited 65,000 claims from the Obama administration. Interest accrued by claims in the backlog that end up being denied, he said, would be forgiven for a year after they were filed.
Lawmakers and advocates for borrowers have expressed concern in recent weeks after reports revealed that the department was considering partly forgiving loans of defrauded students instead of erasing their debts completely.
Democratic lawmakers in the U.S. House and Senate on Tuesday sent a letter to Ms. DeVos and A. Wayne Johnson, chief operating officer of the department’s Federal Student Aid office, seeking more information about the plan.
“Such an effort would be financially devastating to thousands of student-loan borrowers and their families who have been cheated by their colleges or career-training programs,” the legislators wrote. “We have consistently advocated for the department to establish a process that ensures students who have been subject to unfair or deceptive conduct at the hands of their school will have their outstanding loan balances discharged and receive refunds for any and all amounts paid.”
“In other words,” they wrote, “full relief.”
Adam Harris is a breaking-news reporter. Follow him on Twitter @AdamHSays or email him at adam.harris@chronicle.com.
