Thousands of former students at bankrupt for-profit schools run by ITT, Corinthian Colleges, and others are still on the hook for millions of dollars in student loans, even though the Department of Education approved their claims for a refund. Now, lawmakers want Education Secretary Betsy DeVos to explain why.
In a letter [PDF] to DeVos, a group of senators demanded answers about the delay of payment on tens of thousands of student loan discharges that have failed to reach intended students.
Under the Borrower Defense program, a student’s federal education loans can be forgiven if they can prove their college used deceptive practices to convince them to enroll.
According to the letter, the Dept. of Education notified 23,000 students in January that their Borrower Defense claims had been approved and they would receive discharges and refunds within 60 days and 120 days.
Despite this, the senators say they have received reports that many previously approved students have not obtained the relief they were promised within 120 days.
As a result, the senators claim that these borrowers are being billed for unnecessary principal, interest, and even collection fees that they wouldn’t owe had the Dept. provided their discharge.
“In short, they continue to face significant financial burden without the debt relief they are entitled to and have been told to expect,” the lawmakers wrote in the letter. “The Department must uphold its responsibility to provide relief for the students whose lives were disrupted by fraudulent institutions.”
In addition to students not receiving expected discharges, the senators question why, according to recent reports, the Dept. has slowed the processing of submitted Borrower Defense claims.
The Dept. in January said approximately 68,000 borrower defense applications from students who attended Corinthian, ITT, Westwood College, and other schools were pending review.
But, Politico reported last month, that the Dept. had significantly slowed the review process, leaving tens of thousands of students in limbo.
The senators ask DeVos to provide answers to questions including how many borrower defense claims are currently pending review, decision, or adjudication; how may pending claims are from CCI or ITT Technical; of the borrowers with approved claims, how many have not received the discharge.
The letter was signed by senators Dick Durbin (IL), Chuck Schumer (NY), Patty Murray (WA), Sherrod Brown (OH), and Elizabeth Warren (MA).
by Ashlee Kieler via Consumerist
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