The shutdown of Corinthian Colleges and oddly enough the ITT Technical Institute due to fraud charges in 2015 and 2016, subsequently, may have been a win for the Justice Department but this would later become a thorn in the sides of thousands of students.
Degrees issued by these institutions became worthless, and students, as well as some graduates, were already in student-loan debt.
Despite the fact that the Obama Administration put in place some regulations which would see that students who were defrauded get discharged, there has been no positive news from the Department of Education on this.
The power to discharge the loans of students who fell victim to fraud will rest in the hands of the Department of Education but there has been no discharge approval for any applicant.
With up to hundred thousand student-loan borrowers, the total debt accrued is worth billions of dollars. Now, more than 11 months after the Trump Administration came into power, there has been no sign of help for any of the applicants, just 2 denied applications.
The number of students who are seeking government intervention to clear their student debt has increased, with new applications numbering in the tens of thousands since the last Congressional update during the summer by the Trump Administration.
These borrower-defense applications, as these claims are known, have yet to be resolved by the Department of Education.
Although there has been no final verdict on how to address the issue, the department is having a debate to decide if there are certain applicants who can qualify for a partial grant, the criteria to decide the applicants and the amount which this grant will cover for each successful applicant.
For any student borrower to apply for a discharge, there are a few reasons why their application will be acknowledged.
Reasons may include a violation of state laws by the institution or the student being purposely misled by a college.
Although there had been few cases of these issues, applications started streaming in after the failure of the for-profit Corinthian Colleges in 2015 and the closure of ITT Tech in the year 2016.
Even if most of the applications were sent in during the former administration, a lot of applications were still in a consideration review in January when the new government took office. Both disappointing and surprising, the number of applications pending review have only continued to grow since then.
The Washington Post was the first to release the news of a partial relief. According to a spokesperson for the Department of Education, Liz Hill, she stated that she could not confirm if this news was true or not.
Although she confirmed that the department is still trying to determine an acceptable means of addressing the applications, the discussions have not reached a conclusive end.
In June, Betsy DeVos, the Education Secretary, stopped a borrower-defense regulation by the Obama Administration from being put into effect. Although this new rule made a lot of clarifications when explaining the borrowers who would be eligible for student loans
discharged due to fraud, a mention of a partial relief was greatly opposed.
She also stated that alterations would be made to the rules by her department since these rules were not fair to both the schools and the students. A new delay in the process will now see that the new regulation will have to wait until 2019 before it can be put in effect.
As of July, the department stated that there were over sixty-five thousand borrower-defense claims which needed to be addressed but in a recent report by The Post, this number has rapidly increased to over 87,000 applications with inside sources within the department placing the applications at a higher figure.
The recent reports going around have indicated that instead of a full debt relief, the Education Department is looking into a partial debt relief for a number of the applicants. Deciding the applicants that the partial relief will be based on the extent of harm
to the applicant.
The issue of whether all applicants should receive a full or partial relief has also led to debates in different areas with lots of arguments on how the extent of harm is to be determined.
Toby Merrill, He is the Director of Harvard University’s Project for the Predatory
Student Lending, states that even if a student has been able to secure employment, the student will have also suffered harm in the process.
According to Clare McCann, a previous official of the Obama Administration and Deputy Director of the New America federal higher education policy, while a lot of applicants may be eligible to receive a full relief, it would be unreasonable to give it to everyone.
She stated that the amount of reprieve to be provided by the department should differ for a student who got a valueless education and another who got something valuable out of their education.
The issue of an internal discussion over the decision to grant relief to the borrowers is being considered an unfair delay by some student supporter.
In their opinion, these discussions will see applicants who have been waiting for up to two years wait for much longer before they can know their fate.
Justin Draeger, he is the President and CEO at the “National Association of Student Financial Aid Administrators”, also commented that by trying to determine the exact extent of harm for each applicant, the process of addressing the claims becomes less efficient.
In a recent statement, the Education Department stated that an official decision would soon be made on a large number of applications they have already received.
It also stated that if an applicant is denied relief, the interest on the unpaid debt will be cleared for any period after one year from the date they applied for a discharge.