Senators Call for Answers on Stalled Student Debt Relief
Days after Education Department deadline, still no sign of relief for many defrauded students already approved for discharges and refunds
WASHINGTON – Following reports that the Trump Administration has stopped granting relief to student loan borrowers defrauded by for-profit colleges, U.S. Senators Dick Durbin (D-IL), Chuck Schumer (D-NY), Patty Murray (D-WA), Sherrod Brown (D-OH), and Elizabeth Warren (D-MA) demanded answers regarding the delay of payment on tens of thousands of student loan discharges and refunds approved under the “borrower defense” authority.
On January 13th, the U.S. Department of Education announced that it had notified 23,000 defrauded students that they would receive discharges and refunds within 60 and 120 days. In recent weeks, Politico and the New York Times have reported that the new Administration has essentially halted the processing of tens of thousands of pending borrower defense applications from former students of Corinthian, ITT Tech, and other schools. In addition, many previously approved applicants have yet to receive relief despite being assured their discharges would be completed within 120 days – a deadline which for many has now come and gone.
“Although the maximum 120 day timeline has already passed or will soon for these borrowers, it appears many of these students have still not received the discharges they were promised by the Department, and many are still in repayment or collections. These borrowers are thus being billed for unnecessary principal, interest, and even collection fees. In short, they continue to face significant financial burden without the debt relief they are entitled to and have been told to expect,” the senators wrote in a letter to Education Secretary Betsy DeVos. “The Department must uphold its responsibility to provide relief for the students whose lives were disrupted by fraudulent institutions.”
Full text of the letter is available here and below:
The Honorable Betsy DeVos
U.S. Department of Education
400 Maryland Ave, SW
Washington, DC 20202
Dear Secretary DeVos:
We write today to request an update on the U.S. Department of Education’s (“Department”) processing of borrower defense claims for students who were defrauded by their colleges and universities, including those operated by Corinthian Colleges, Inc.
The Higher Education Act gives the Secretary broad authorities to help defrauded students, including through a process called borrower defense which provides the ability to discharge and refund the federal student loan debt of borrowers who were misled by their schools or were the victims of unlawful and abusive practices in higher education. In giving the Secretary this authority, Congress made clear that students should have an avenue for relief when an institution of higher education defrauds them.
In recent years, state Attorneys General, the Department, and other federal agencies have collected mountains of evidence that several large college chains have engaged in a variety of widespread, unfair, deceptive, and abusive practices that qualifies students for loan discharge under borrower defense. These companies include Corinthian Colleges, Inc. (Corinthian), ITT Education Services, Inc. (ITT), Westwood College, and American Career Institute (ACI).
The high profile failures of Corinthian and ITT, as well as much-improved federal and state efforts to notify borrowers about their potential eligibility for borrower defense, have led to a surge in applications to the Department for relief. During the previous Administration, the Department approved more than 28,000 borrower defense claims from Corinthian students representing nearly $560 million in loan relief.
On January 13, 2017 the Department announced that it would provide automatic group relief to some 4,000 students who were misled by the now-defunct ACI chain in Massachusetts, a school that admitted to breaking state law. Further, the Department stated that it had received over 2,500 borrower defense claims from former ITT students and at the time the agency was “beginning to award the first discharges to affected students.” The Department also reported at the time that more than 68,000 borrower defense applications from Corinthian, ITT, Westwood College, and other schools were still pending further review.
Importantly, within that January 13 announcement, the Department noted that thousands of borrowers had a borrower defense claim or closed school discharge application approved, but had not yet received the discharge or refund to which they were entitled. The announcement noted that more than 23,000 of these borrowers had received an email notifying them of the process for final discharge relief, a redacted copy of which is enclosed, and that their forgiveness and refunds would be complete within 60 and 120 days. Although the maximum 120 day timeline has already passed or will soon for these borrowers, it appears many of these students have still not received the discharges they were promised by the Department, and many are still in repayment or collections. These borrowers are thus being billed for unnecessary principal, interest, and even collection fees. In short, they continue to face significant financial burden without the debt relief they are entitled to and have been told to expect.
The Department must uphold its responsibility to provide relief for the students whose lives were disrupted by fraudulent institutions. We are concerned that the Department has provided little information to the public and to affected borrowers about the borrower defense process, including when and how individual loans will be discharged. As such, we ask for your response to the following questions in writing by May 31:
- How many borrower defense claims are currently pending review, decision, or adjudication by any Department official in total and disaggregated by state?
- How many pending claims are from students who attended Corinthian or ITT, respectively, disaggregated by state?
- After Corinthian and ITT, what are the next three largest sources of borrower defense claims, disaggregated by institution?
- How many borrowers who have a pending borrower defense application have had their forbearance expire?
- How many borrowers who have a pending borrower defense application will have their forbearance expire within the next six months?
- What is the total dollar value of accumulated interest and fees for borrowers whose claims are pending?
- How many borrower defense claims has the Department received on or after January 20, 2017, disaggregated by state?
- How many of those claims received are from students who attended Corinthian or ITT, respectively, disaggregated by state?
- How many total borrower defense applications has the Department approved between January 20, 2017 and today? What is the total dollar amount of relief?
- How many of any approved borrower defense claims during this time period are from students who attended Corinthian or ITT, respectively, disaggregated by state?
- Of the borrowers whose borrower defense claims were approved (as designated by an email from Federal Student Aid) but who had not yet received a discharge or full refund on or before January 19, 2017, how many have since received a discharge or full refund posted to their accounts?
- How many attended Corinthian, ITT, or ACI, respectively, disaggregated by state?
- What is the total dollar value of accumulated interest and fees for these borrowers whose applications have not yet received their previously-approved discharge or refund, if any?
- Please indicate which institutions and programs have borrowers with approved claims that are eligible for or have been granted:
- Full refund of amounts paid; or
- Discharge of loan balances outstanding.
- Do any Department staff, including employees of Federal Student Aid, still maintain a regular report to a senior official or officials on the status of pending or adjudicated borrower defense claims?
- If so, please provide a copy of the reports issued since January 20, 2017.
- If the reports are no longer being provided to any official, please indicate why the decision to halt these reports was made.
Given that recent reports by both Politico and The New York Times have indicated that the Trump Administration has halted granting relief under borrower defense, the information requested above is critical to knowing whether or how the Department is using the authority provided under the Higher Education Act to provide relief to borrowers.
Thank you for your attention to this matter. We look forward to your prompt response.
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