U.S. District Judge William Alsup in the Northern District of California said he was “concerned that no progress has been made regarding the backlog of applications,” echoing the complaints of advocacy groups.
The Biden administration inherited petitions from former for-profit college students requesting debt forgiveness on the grounds that they were defrauded by their schools. The applications — known as borrower defense claims — piled up at the Education Department amid a series of college closures and the Trump administration’s efforts to delay and limit loan cancellation.
Those efforts resulted in a spate of lawsuits, including a class-action case brought against former education secretary Betsy DeVos and her agency in 2019 by borrowers who had waited years for their claims to be processed. After a failed settlement with the Trump administration, borrowers looked to the Biden administration to resolve the case.
Instead, the administration has continued to fight the lawsuit. Alsup ordered DeVos to appear before the court, but the Biden administration filed a petition in June asking the Court of Appeals for the Ninth Circuit to overturn his ruling. A decision is set to come down any day now.
On Tuesday, Alsup said the former education secretary could provide important evidence in the case. He added, “In the meantime, and at minimum, the Court believes it is possible for the parties to resolve and agree upon an expedited, class-wide procedure for processing the borrower defense claims.”
An Education Department spokesman said the federal agency is working diligently to collect and review evidence that it anticipates will result in more approvals. The agency also is weighing ways to strengthen the process for borrowers to seek relief, the spokesman said.
When President Biden entered office in January 2021, the Education Department had more than 85,000 claims awaiting adjudication, about 61,000 claims that had been approved and another 137,401 denied, according to department data.
Borrowers continued to file claims, raising the total to 429,000 applications by the end of November. By then, the department had more than doubled the number of approved claims to 140,000, though denials also rose. Roughly 103,000 applications were awaiting adjudication.
“We share the judge’s concern about the slow pace of progress,” said Eileen Connor, legal director of the Project on Predatory Student Lending, a group representing borrowers in the class-action lawsuit. “We’re talking about low-hanging fruit in terms of canceling student loans, and there’s an opening here to correct wrong on top of wrong. It just hasn’t happened. This is Biden’s backlog now.”
An attempt to settle the class-action lawsuit imploded in 2020 when the Trump administration revealed it had denied 94 percent of requests processes after agreeing to clear out nearly 170,000 unresolved claims.
The deal had promised swift action within a year and a half. Borrowers who were still awaiting a decision after 18 months would have gotten 30 percent of their federal loans discharged for every month that the department is late, and those who are denied reserve the right to an appeal. But borrowers said the rejection letters they received lacked detailed explanations for the denials, making it difficult to appeal.
Alsup rejected the settlement, saying the denials undermined the proposed agreement.