Applications for debt relief from students who say they’ve been scammed by their schools have been languishing at the Department of Education.
That’s according to data from the agency requested and published late last week by the office of Senator Patty Murray, the ranking Democrat on the Senate’s Health, Education, Labor and Pension committee, which oversees the Department.
By Dec. 31, 2018, the number of received and pending claims grew to 218,366 and 158,110, respectively, but the number of approvals remained stead at 47,942.
As of June 30, 2018, the Department had received 165,880 applications for debt relief from these borrowers with 105,998 pending. The agency had approved 47,942. By Dec. 31, 2018, the number of received and pending claims grew to 218,366 and 158,110, respectively. But the number of claims the agency approved, remained at 47,942.
For borrowers waiting to hear back from the Department, the lack of a response “basically destroys their lives,” said Adam Pulver, an attorney at Public Citizen Litigation Group, who has represented some of these borrowers in litigation against the Department.
Without a sense of whether their debt will be forgiven, these borrowers aren’t “able to move on, they’re not able to make financial-planning decisions about their future,” Pulver said. “They are basically stuck,” with the consequences of attempting to get an education at schools often later determined to be fraudulent, he added.
The release of the data by Murray’s office is the latest development in a years-long legal and regulatory battle over a law known as borrower defense to repayment. The law allows borrowers who say they were misled by their college to have their federal student loans wiped away.
For borrowers waiting to hear back from the Department, the lack of a response ‘basically destroys their lives.’
Liz Hill, a Department of Education spokeswoman, wrote in an emailed statement that “pending litigation has slowed down the Department’s processing to provide relief to additional borrowers.”
“We will fully implement the 2016 borrower defense regulations and ensure those who qualify for discharge receive it,” she added.
Though the law has been on the books since the 1990s, it didn’t come to widespread attention until the collapse of Corinthian Colleges in 2015, when suddenly thousands of students, organized by activists, were clamoring for relief.
Under pressure from the students and activists, the Obama-era Department of Education established a rule and process borrowers could use to apply to have their loans discharged under the borrower defense regulation.
After a for-profit college association sued the government over the rule, the Department under current Secretary of Education, Betsy DeVos, delayed implementing the Obama-era regulation. Pulver’s organization, along with Harvard University’s Project on Predatory Lending, sued over the delays as did a group of states attorneys general.
In the fall, a judge ruled the delays were illegal and that the 2016 law should take effect. The lawsuit filed by the for-profit college association is still pending, but the group dropped all of its claims relating to the debt-relief process and is, instead, focused solely on a provision in the 2016 rule that bans colleges that receive federal financial aid from requiring students to give up their right to go to court as a condition of enrolling.
Given that the judge’s decision requiring the Department to implement the law came several months ago, Pulver said he believes the Department is “just dragging their feet and there’s no good faith basis to do so,” he said.
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