J. Pat Carter / AP
According to the U.S. Department of Education, nearly 16,000 federal student loan borrowers who have been misled by commercial colleges will receive $ 415 million in debt. These borrowers – who have studied at the University of DeVree, the ITT Institute and other schools – will receive relief under a legal provision known as Borrower Protection, which promises to ease the loan for fraudulent borrowers.
With that statement, the Biden administration says it has approved approximately $ 2 billion in loan easing for more than 107,000 borrowers through borrower protection.
Wednesday’s news is highlighted not only by borrowers they help, but also because the department first said it would meet borrower protection requirements by recognizing students cheated, while the school accused of their fraud, DeVry University, remains open to business and on -mains access to millions of dollars in federal student loans.
According to the department, approximately 1,800 DeVry students will receive more than $ 70 million in loans after the department “determined that the institution has widely distorted employment rates.”
The department also said it expects that the number of approved claims from DeVry students will increase, and that it “will seek to reimburse the cost of extracts from DeVry.”
“The department remains committed to issuing statements to borrowers if evidence shows that their college has violated the law and standards,” said U.S. Education Secretary Miguel Cardona. “Students are counting on their colleges to be true. Unfortunately, today’s findings show too many cases of students being misled into borrowing from institutions or programs that failed to deliver on what they promised.”
DeVry University did not immediately respond to a request for comment.
DeVry had previously been in hot water
This message is the latest confrontation in years of tension between DeVry and the federal government. In August 2015, the Department of Education required DeVry to either prove its usual advertising claim – that since 1975, 90% of job seekers find work in their field within six months of graduating – or stop it. In October 2016, DeVry said it lacked the data to substantiate the claim, and agreed to stop.
Then in December 2016, DeVry agreed to a $ 100 million settlement with the Federal Trade Commission over similar complaints that its advertising was fraudulent.
It was something that 90% claim the department used to justify its latest move to approve DeVry’s borrower protection requirements. The department says that after an investigation, it found that DeVry’s employment rate was around 58% and that “more than half of the jobs included in the declared 90 per cent employment rate were held by students who got them long before DeVry graduated and often before the way they acted. ”
“These vacancies are not related to DeVry’s education,” the department said, “and their inclusion contradicted the simple language of the 90 percent claim. conducted a search in a way preferred by the university’s career services department. “
Despite these findings, the department has made it clear that it is not yet reducing DeVry’s access to the federal student assistance program – a move that would be potentially devastating for a school like DeVry, where the vast majority of students receive federal loans.
The pressure is growing to help fraudulent borrowers
The department came under enormous legal and political pressure to help deceived students. Much of that pressure began in June 2019, when the Predatory Student Lending Project sued the Trump Department of Education (Sweet v. DeVos), demanding to process claims from more than 200,000 borrowers who said they had been deceived by colleges.
Trump’s education secretary, Betsy DeVos, was an outspoken champion of the commercial sector of colleges and openly opposed the use of borrower protection to provide students with full or even partial credit relief. Under her supervision, the consideration of applications slowed down, and then stopped altogether.
In early 2020, after Sweet v. DeVos was temporarily settled, the department sent thousands of denials to borrowers – although these denials were vague and inexplicable.
“We don’t think their evidence has been properly reviewed, and we certainly don’t think they’ve received an adequate explanation for why their claims were dismissed,” says Eileen Connor, director of the student loan project and plaintiffs ’chief attorney.
The judge agreed with Connor, and in late 2020 the department agreed to stop full waivers until the case is resolved.
This case, now “World vs. Cardona” as well as the backlog on borrower protection hang over the Biden administration like the sword of Damocles. According to federal data, more than 85,000 applications were pending in January 2021, and another 137,000 were rejected based on DeVos ’interpretation of the rule. Wednesday’s announcement not only helps the department close that backlog, but also allows the Biden administration to take credit for efforts to ease the loan, which would likely force a lawsuit or settlement in the World case.
Over the past year, Biden’s Department of Education has made modest progress in bridging the gap, announcing in June that it would approve another 18,000 borrowers from the ITT Technical Institute, and in July more than 1,800 claims from students in three small schools.
But the latest federal data on borrower protection shows that the backlog at the end of September was actually higher (nearly 88,000) than it was when Trump left office.