FOR IMMEDIATE RELEASE
December 20, 2017

CONTACT
Alexis Goldstein, 202-973-8005, alexis@ourfinancialsecurity.org

Americans for Financial Reform strongly condemns the Department of Education’s announcement today that they have denied relief to 8,600 borrowers who applied for debt discharges through borrower defense to repayment. The Department has not specified—but must immediately supply—the reasons for those denials, and how many of them came from Corinthian or ITT, schools that closed under the weight of their own illegal and abusive acts.

“The news of the Department’s scheme to grant only partial relief to scammed students is just one more piece of an abundance of evidence that the Trump Administration and the DeVos Department of Education care more for the proprietary institutions that break the law than they do for the students they defraud,” said Alexis Goldstein, Senior Policy Analyst at Americans for a Financial Reform. “For Secretary DeVos, it’s predatory companies first, students last.”

To make matters even worse, today’s announcement also included a new, convoluted, and insulting scheme to grant only partial relief to certain borrowers whose schools broke the law. Borrowers who applied for defense to repayment sought cancellation of loans incurred at schools that wasted their time and left them with no good prospects for future employment.

While we will always welcome approvals of borrower defense applications, the 12,900 approvals announced today are still far too few given the scope of the harm done to hundreds of thousands of former students of institutions like Corinthian, ITT, the Art Institute and others. Prior to today’s announcement there were nearly 100,000 applications that had stalled in a backlog; 80% of those are still outstanding. It is also unclear how many, if any, of these approvals overlap with the 28,000 applications previously approved by the Department prior to the Trump Administration. And even those lucky enough to find relief on the Department’s new and arbitrary scheme, it follows years of waiting while students struggled with staggering debt, ruined credit, and wasted time.

Granting only partial relief is an abdication of the Department’s responsibility to protect students and uphold the law. The department has already failed these borrowers once—by allowing Title IV federal dollars to flow to schools that defrauded their own students. Now, the Department is doubling down on its recklessness and unaccountability, by telling students who’ve waited for relief for years that they will only receive partial restitution. This news comes on the same day as a new nation-wide class action by borrowers against the Department of Education for illegally and unfairly denying relief to tens of thousands of former Corinthian students who the Department already decided are entitled to have their loans discharged and their payments refunded.

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