Democratic AGs Sue DeVos on Borrower Defense


Before DeVos acted, the department had granted relief to 28,000 students whose claims were similar to those that now are pending, Becerra said.

The Education Department can discharge federal student loans when a college uses illegal tactics to persuade students to borrow money.

A 1994 rule allowed loans to be forgiven if a college deceived students, but it was rarely used until the end of the Corinthian and ITT Tech for-profit chains. That is up from what the Department of Education previously found in 2015, that some 80,000 students who borrowed loans, including more than 38,000 in California, were induced to enroll fraudulently in educational programs offered by Corinthian.

Healey was joined in the suit by attorneys general from NY and IL, with a similar suit being brought in California by Attorney General Xavier Becerra. But not a single claim has been approved since Trump came into office.

The lawsuits come after months of pressure from states, borrower advocates and Democratic lawmakers, who say students can not repay the often-large debts because the schools did not give them adequate work training or diplomas. "We know that the department is holding a pot of money that was made available through the settlement of lawsuits to provide relief to these students".

The Department of Education's inspector general said this week that, while the procedure for processing claims could be improved, the system works well enough that there is not a good excuse for the department not to clear the backlog of claims.

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U.S. Department of Education spokesman Jim Bradshaw said he could not comment.

All the attorneys general suing are Democrats.

The other alleges DeVos has delayed the rollout of regulations that require the Education Department to provide a streamlined loan forgiveness process to students who have been defrauded by for-profit universities. Claims were being processed by the prior administration after a settlement a year ago.

Attorneys working on the applications have flagged nearly 12,000 for approval and about 7,200 for denial. It states that DeVos is unlawfully delaying the approval of claims filed by defrauded students who had federal student loans filed with post-secondary subsidiary schools owned by the now-defunct Corinthian College Company, which folded in 2015.

Applicants awaiting pending claims are now accruing interest on their loans, while many have placed their loans in a grace period they can extend while they wait for approval. But the federal government had seized the tax refunds, government benefits or wages of more than 30,000 Corinthian borrowers as of a year ago, according to the MA complaint.

"(Attorneys General are) suing Secretary DeVos and the U.S. Department of Education to protect students who have waited in vain for the department to follow the law and give them the relief they've been promised", Healey said in a conference call with reporters. "We're going to keep continuing to fight as long as the department ignores its obligations, and ignores what is right".

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