DeVos says Trump administration may only partially forgive defrauded students’ loans
Inside Subprime: October 31, 2017
By Caroline Thompson
In yet another blow to victims of for-profit college scams, U.S. Secretary of Education Betsy DeVos may not follow an Obama-era policy that would wipe out the debt of students who were defrauded by now-defunct for-profit colleges. DeVos is currently at the center of a lawsuit filed by 18 states over her department’s failure to implement a rule designed to protect students from for-profit college scams.
Instead of erasing the debt in full, the Education Department may now look at borrower incomes to determine what percentage of the debt to wipe away. Critics of the Department of Education say this move is yet another sign that DeVos is catering to the for-profit industry on behalf of President Trump, who earlier this year was forced to pay $25 million to settle a lawsuit against his own for-profit college, Trump University, after the school mislead students on their job prospects while raking in millions of dollars in tuition.
Massachusetts Attorney General Maura Healy is among many who are calling for DeVos to follow the letter of the Obama-era rule.
“Secretary DeVos and her team want to give predatory schools a free pass to cheat students and taxpayers,” Healey said in a statement yesterday. “This latest announcement will hurt Massachusetts students and families who are drowning in unfair and unaffordable debt.”
More than $550 million in loan forgiveness has already been paid out to these defrauded students. According to the Boston Herald, student loan advocates say “the idea of giving defrauded students only partial loan relief was unjustified and unfair because many classmates had already gotten full loan cancellation.”
To make matters worse, struggling for-profit scam victims have been increasingly falling for phony loan forgiveness programs, which promise full debt relief for a “small” $500-$700 fee.
Eileen Connor, the litigation director at Harvard University Project on Predatory Student Lending, told the Boston Herald that anything other than full cancellation of these for-profit loans is unacceptable.
“The nature of the wrong that was done to them — the harm — is even bigger than the loans that they have,” Connor said.
For more information about student loans and how to manage them, check out these related articles:
- How to Pay for College: A Student Loans and Scholarships Primer
- The OppLoans Guide to Consolidating Student Debt
- Student Loan Forgiveness: How it Works