WUOMFM

Nearly 2,000 MI college students see no debt relief yet under Trump administration

Jul 31, 2017

Credit Steve Carmody / Michigan Radio

More than 460 Michigan college students who say they have been defrauded by their for-profit schools filed federal claims this year to try to get their student loans forgiven. But the Trump administration has not approved any so-called borrower defense claims yet.

Here's how Inside Higher Ed describes the "borrower defense to repayment" rule:

Borrower defense to repayment, until recently an obscure provision of the Higher Education Act, allows borrowers to seek to have their student loan debt discharged if they were the victim of fraud or misrepresentation by their college or university. Education Secretary Betsy DeVos announced last month that she would suspend and overhaul an ambitious Obama administration borrower defense rule that established federal guidelines for discharge of loans. She said at the time that the department will continue to process claims submitted under existing rules.

U.S. Senator Richard Durbin of Illinois released a letter last week from an official with the U.S. Department of Education in which it was revealed that "no borrower defense applications have been approved" by the Trump administration between January 20, 2017 and when the letter was dated: July 7, 2017.

The letter was a response to an inquiry Sen. Durbin sent, along with four other Democratic senators, requesting an update on the department's efforts to process borrower defense claims.

The letter shows nearly 15,000 claims have come in since January alone -- 468 from Michigan, the 10th highest in the country.

It goes on to say that there are currently 65,169 claims pending review, the vast majority of which came in during the Obama administration and are from students who attended the now-defunct Corinthian Colleges. The U.S. Department of Education has acknowledged that the for-profit college engaged in fraudulent practices.

California, Florida, and Texas have the highest number of pending borrower defense claims. Michigan comes in at number seven with 1,907 claims pending; 1,345 are from former Corinthian College students, 367 are from former ITT Tech students, and the remaining claims are from other schools.

While students wait for relief, interest continues to accrue on these loans to the tune of $143 million, according to the letter sent to Sen. Durbin.

Jennifer Wang is with the student advocacy group The Institute for College Access and Success, a nonprofit student advocacy group. She says "the fact that the Department of Education has allowed these applications for relief to languish like this is really upsetting."

Earlier this summer, U.S. Department of Education Secretary Betsy DeVos announced she would delay implementation of a package of borrower defense rules that the Obama administration had finalized last October and were set to go into effect July 1.

DeVos said in a press release last month that the current borrower defense rules resulted in "a muddled process that's unfair to students and schools, and puts taxpayers on the hook for significant costs." DeVos did go on to say that "promises made to students under the current rule will be promises kept."

A U.S. Department of Education spokesperson acknowledged the large backlog of claims carried over from the Obama administration and told The Washington Post the department is "working diligently to set up a process to start approving claims again."