Student Debt Relief: DeVos Rejected Staff Recommendations On Loan Forgiveness For Corinthian, ITT Students

In deciding to reject claims for debt relief by students defrauded by for-profit colleges, Education Secretary Betsy DeVos reportedly ignored the recommendations of staff, arguing instead that students had received some benefit from their classes.

NPR, which obtained internal Department of Education memos, reported Wednesday career staff in the department’s Borrower Defense Unit sided with student borrowers who claimed schools like Corinthian Colleges and ITT Technical Institute lied to them about the value of their degrees and training, falsely promising them jobs.

Just weeks before DeVos was sworn in as education secretary, the unit reviewed thousands of requests from defrauded borrowers seeking to have their debt erased, siding with the borrowers under “borrower defense” rule, which established a legal right for consumers to seek relief from fraud and other illegal activity. She ordered an end to reviews for relief in 2017 with some 200,000 claims still outstanding.

"Given this extensively well-documented, pervasive and highly publicized misconduct, the Department has determined that the value of an ITT education — like Corinthian — is likely either negligible or nonexistent. ... Accordingly, it is appropriate for the department to award eligible borrowers full relief," a Jan. 10, 2017, memo filed by staff read.

"'Full relief' sounds nice, but it really means 'full liability' for taxpayers – and that's not fair in cases where a borrower is not entitled to it,” Education Department press secretary Angela Morabito told NPR. “That's why it's imperative that we consider each Borrower Defense claim individually. To force taxpayers to provide blanket forgiveness would be abandoning our duty to be good stewards of tax dollars. The Department will provide student loan relief to those who qualify for it."

DeVos is scheduled to testify before the House Education and Labor Committee on Thursday, her first appearance before Congress in seven months.

She has argued the borrower protection rules were too lenient and allowed anyone to apply for forgiveness. The department in 2017 began looking at Social Security Administration data in making its debt forgiveness decisions but a federal judge last year prohibited the practice.

DeVos unveiled a new plan Tuesday providing partial debt reduction based on students’ earnings.

The Department of Education earlier this month reported it had incorrectly collected loan debt from more than 29,000 borrowers, up 17,000 from its previous estimate.