Sen. Elizabeth Warren (D-Mass.) is asking the U.S. Department of Education’s inspector general to investigate the agency’s use of earnings data to grant partial student loan forgiveness to defrauded borrowers.
The request arrives two weeks after the department said it will provide debt relief to former students of Corinthian Colleges by comparing the average earnings of students in similar vocational programs. That earnings information is collected under gainful employment, a regulation that penalizes career-training programs for producing too many graduates with more debt than they can repay. Warren is questioning whether the department can rightfully use the data, which is supplied by the Social Security Administration, for any purpose other than to evaluate vocational programs.
This is not the first time the senator from Massachusetts has pressed the matter. After The Washington Post first reported the partial relief plan in October, Warren and other congressional Democrats wrote Education Secretary Betsy DeVos and Arthur Wayne Johnson, the head of the student aid office, about the forgiveness model. They said the department must publish a notice in the Federal Register and solicit public comment to change the purpose of the gainful employment data. Furthermore, they said the department is required to prepare reports for Congress on such a proposal.
The lawmakers argued that gainful employment data is an imprecise measure for calculating forgiveness. The data only reflects the take-home pay of federal aid recipients who completed their programs, but many applicants for relief may never have finished school. The Education Department said applicants will receive full loan forgiveness if their earnings are less than 50 percent of their peers’. If their pay is at or above that threshold, the department will provide relief on a sliding scale.
A federal statute known as borrower defense to repayment gives the Education Department authority to discharge federal student loans when a college uses illegal tactics to persuade students to borrow money. The department has said that its partial relief plan is well within the parameters of the law. What’s more, the agency has said the use of the earnings data is fully consistent with its agreement with the Social Security Administration.
Education officials did not immediately respond Tuesday to requests for comment on Warren’s letter. The Social Security Administration has said its general counsel is consulting with attorneys at the Education Department on the permissible use of data under their data exchange agreement.
“There is no evidence of a new data exchange agreement between the department and [the Social Security Administration] for use in borrower defense determinations, nor has there been a revision to the gainful employment information exchange agreement,” Warren wrote in the letter to the inspector general.
The agreement “explicitly and exclusively” allows federal earnings data to be used to enact the gainful employment regulation, she noted. Based on the plain text of the agreement, Warren said the department does not appear to have the power to employ the data in student loan discharge determinations.
And recent correspondence with the Social Security Administration might bear out her claims. In an email obtained last month by The Washington Post, the agency told a Democratic staffer that based on an “unofficial, non-legal, staff-level understanding . . . we do not believe [the Education Department] would be authorized to use earnings information we provide under any current agreement to make decisions about whether or not to grant debt relief to borrowers in certain vocations.”
Liberal lawmakers and student advocacy groups have taken DeVos to task for the partial debt relief plan, saying the model will create more hardship for people who have been victimized by unscrupulous schools. Debt relief applications have piled up over the past year as the Trump administration refused to take action until education officials could fully review procedures instituted under the Obama administration. Late last month, the department approved 12,900 applications for student loan forgiveness and denied 8,600 from former Corinthian students.