More than 140,000 applications for student debt relief are pending at the U.S. Education Department, and Education Secretary Betsy DeVos could not tell lawmakers Thursday whether any of them have been approved.
“Don’t you have a heart when it comes to 140,000 of these victim students who are trying through the borrower defense rule to get relief from the fraud that was perpetrated on them by these schools?” Durbin asked. “Why is it taking so long for your department to give these students a break?”
It has been four months since the Education Department released updates on the status of student loan fraud claims. Tens of thousands of applications were in the queue at that point, and more may be piling up. According to data the department provided the Senate panel, the number of applications has increased by hundreds every day.
“These students are waiting,” Murray said. “I want to know … how many have been approved, because it appears to me that we have not moved forward on this at all. That’s not fair to those students, their families or their future.”
DeVos told Murray the department regularly reviews what’s known as borrower defense to repayment claims, and she said she “believes” claims have been approved this year. But neither the secretary nor her staff in attendance could provide specific numbers.
People close to the matter who are not authorized to speak publicly say no new applications have been approved or denied.
The Education Department did not confirm the status of new claims.
Department spokeswoman Liz Hill said, “We are working to implement the 2016 borrower defense rule and ensure those who qualify for discharge receive it.”
The agency has the authority to discharge federal student loans when a college uses illegal tactics to persuade students to borrow money. The Education Department has been inundated with claims in the four years since Corinthian Colleges and ITT Technical Institute closed amid allegations of fraud and steering students into predatory loans.
The Trump administration has been reluctant to use its authority to discharge loans. It refused to take action on borrower defense claims for nearly a year until Education Department officials could review procedures instituted under President Barack Obama. And then, it agreed to grant only partial student loan forgiveness, which a federal judge banned in May.
DeVos also tried to block Obama-era revisions to simplify the process for students and shift more of the cost of discharging loans onto schools. She argued that the rule made it too easy for students to cancel their debts, but a federal judge in October ordered the immediate implementation of the Obama regulation.
DeVos told lawmakers that the department is following the judge’s order and defended the mounting claims by noting that many of them were inherited.
“Let me just remind you, when I came into office we were greeted with tens of thousands of claims for borrower defense, and we did not agree with the Obama administration’s approach to this,” DeVos told Murray.
Applicants have endured a long wait that for many started under the Obama administration. Still, a report from the Education Department’s inspector general found that from July 1, 2016, through President Trump’s inauguration, the department approved more than half of the 46,274 claims it received. In contrast, the Trump administration had received 25,991 claims for loan discharges, denied two and approved none through the end of 2017.
“There is nothing preventing you from providing relief to struggling borrowers today,” Murray said. “I don’t understand why the department can’t fully discharge the loan today for tens of thousands who were defrauded years ago by Corinthian Colleges.”
DeVos said, “The Corinthian College claims are being processed and dealt with forthwith, and will continue to be.”