The Trump administration is delaying action on requests for student loan forgiveness, putting tens of thousands of students scorned by for-profit colleges in limbo.
More than 65,000 former students have submitted claims to the Education Department under the Borrower’s Defense scheme. The department has put these claims on hold as it rewrites rules implemented by the Obama administration. The student loan industry has been pushing for a rewrite of the rules, which provide student protections.
Obama’s rules would have prohibited schools from forcing students to sign agreements waiving their right to sue. Students who were defrauded would have had a streamlined path to loan forgiveness, paid for by the schools – not taxpayers.
Julian Schmoke Jr., former associate dean at DeVry University, was appointed head of the department’s enforcement unit in August by Betsey DeVos, Education Secretary. DeVos has also tapped an aide to Florida’s attorney general who played a role in the decision not to pursue legal action against Trump University.
The Department of Education is sitting on over 2,000 requests for loan forgiveness from DeVry students.
Liz Hill, spokesman for the department, said they are working on streamlining the process and will resolve claims as quickly as possible.
“Unfortunately, the Obama administration left behind thousands of claims, and we will need to set up a fair and equitable system to work through them,” said Hill.
The Obama administration targeted for-profit colleges that used deceptive practices to lure in students and convince them to take out big loans. Schools like ITT Technical Institute and Corinthian Colleges were forced to close their doors. The Education Department, under Obama, approved more than $650 million in loan cancellations for these students.
No new claims have been approved since DeVos took over as Education Secretary. But the department is in the process of discharging loans for claims approved under the previous administration.
“Let’s be clear, no student should be defrauded,” said DeVos. “And in case of fraud, there should be a remedy. But we also know this approach has been unevenly applied, and if there’s going to be regulation around some institutions, we believe it needs to be fairly applied across the board.”
Trump has called for changes to student loan repayment plans and forgiveness schemes, including the elimination of student forgiveness for public workers altogether. His plan would include similar repayment plans to what Obama implemented, but loans would be forgiven after 15 years instead of 25.