Nobody likes to have student loans, but they are probably especially painful when the institution you attended was shut down or unaccredited. For those students, salvation may come in the form of the “borrower defense to repayment” which essentially allows for the “forgiveness of the federal student loans used to attend a school if that school misled them or engaged in other misconduct in violation of certain laws.”
Many now-defunct for-profit schools fall into this category, but as former students have applied for loan forgiveness they have run into problems. First, the Department of Education attempted to delay the implementation of the borrower defense rule with Secretary of Education Betsy DeVos citing unfairness to the taxpayers. A US District Court determined that was unlawful. However, students still may not receive the money they feel they are owed.
Internal memos show Betsy DeVos has overruled her department’s findings on the student loan cases thus blocking relief for defrauded students. The internal Department of Education memos found that credits from the fraudulent institutions are essentially worthless, but Secretary DeVos maintains most students got some value from the schools they attended and thus, deserve no more than partial relief at best. DeVos does have the authority to overrule her department.
The memos obtained by NPR seem to paint a picture of defrauded students struggling to find jobs. In particular, struggling to find jobs in their chosen field that would enable them to pay back the loans.
This isn’t the only student loan controversy Secretary DeVos has faced. She was also sued by the American Federation of Teachers over the Public Service Loan Forgiveness Program, a program that was supposed to enable student loan borrowers that work in public service jobs to get their loans forgiven after 10 years. So far, the Department of Education has rejected 99% of the applicants. Read the memos here. (NPR)
