6 months ago
As reported by CNBC, over "150,000 former students of for-profit colleges filed a lawsuit against the U.S. Department of Education and Education Secretary Betsy DeVos on Tuesday." The lawsuit claims students are deprived of debt relief "to which they’re legally entitled." As the new applications keep coming in, about 160,000 students have claimed their school defrauded them. The Typical Student team learned the details.
According to the lawsuit, the Department of Education under DeVos is accused of "failing to implement an Obama-era regulation known as “borrower defense, ” which allows students to have their federal student loans canceled if their school misled them or engaged in other misconduct." Student plaintiffs are represented by Harvard Law School’s Project on Predatory Student Lending and Housing & Economic Rights Advocates.
Almost all of the 160,000 student complaints concern for-profit schools. It is estimated, there are some 7,000 across the US, and they take in around 15% of government financial aid. So, the student loan borrowers keep waiting without a viable answer from the Department of Education which "hasn’t approved or denied a borrower defense claim since June 2018." Some borrower defense applications were filed in 2015, with the Department of Education leaving these cases undecided.
Borrower Defense Regulation
In 2017, the audit of the Department of Education’s Office of Inspector General discovered "that government staff working on borrower defense claims had been instructed not to submit any additional applications for approval." As told by CNBC, last year, the court ruled that "DeVos’ delays of the borrower defense regulation were unlawful." Experts believe the agency keeps neglecting student applications.
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