Via The Project on Predatory Student Lending
TT and Corinthian Borrowers Continue to Fight for Relief as the Department of Education Skirts the Law Every Step of the Way
At the end of last week, there was a great deal of news from the U.S. Department of Education — reinforcing that it skirts the law and epitomizes corruption — and much of it flew under the radar.
Automatic Closed School Discharge for 7,000 ITT Borrowers
Betsy DeVos announced that the Department finally began to process automatic closed school discharges for certain borrowers who were cheated by ITT Tech and were enrolled when the company shut down. The Department estimated it would cancel $95 million in loans to ITT students.
The announcement followed demands from elected officials like Senator Dick Durbin, Senator Elizabeth Warren and other senate democrats for the Department to follow the law and process these discharges.
The Department has fought against discharging bogus student loans from ITT Tech for years. Ultimately, Education Secretary Betsy DeVos and the Department were mandated to process these automatic closed school discharges after a successful lawsuit brought by students (Bauer v. DeVos) ended the illegal delay of the 2016 borrower defense rule, and elected officials like Senator Dick Durbin demanded it.
While this is good news for these select students, many more are still waiting for justice. And the Department of Education continues to go out of its way to prevent them from getting it.
- Approximately 45,000 students were attending ITT Tech when it closed in September 2016, and were left with massive debt and no diploma. Approximately 16,000 ITT students have already individually applied for and been granted closed school discharges. The Department’s announcement covers about 7,000 additional borrowers.
- By the end of 2018, more than 19,000 former ITT students had applied for borrower defense, and because of the Department’s inaction, their bogus debts are still hanging over their heads. Secretary DeVos needs to follow the law and cancel the debts of all ITT students once and for all
- Just three weeks ago, Secretary DeVos published a new borrower defense rulegutting protections for student borrowers and eliminating the automatic closed school discharge provision. This rule would leave students without this safety net if their school abruptly closes.
Illegal Collection on more than 16,000 Corinthian Borrowers
At the same time, Secretary DeVos admitted in a court filing that the Department of Education continued to collect from thousands of former Corinthian Colleges students in direct violation of a federal court order.
According to new numbers revealed by the filing, thousands of students were hurt by DeVos’ illegal actions.
- The filing was made in a class action lawsuit by Corinthian Colleges students represented by the Project and HERA, Calvillo Manriquez v. DeVos.
- Last year in this case, the federal court ordered Secretary DeVos to stop collecting the loans of thousands of students who were defrauded by Corinthian Colleges. Unfortunately, that didn’t happen.
- Instead, the Department demanded incorrect loan payment from 16,034 Of those students, 3,289 borrowers made one or more loan payments because of these demands, which they were not actually supposed to pay. The Department has harmed the credit of 847 non-defaulted borrowers. The Department subjected 1,808 borrowers to involuntary debt collection by garnishing their wages or taking their tax refunds or benefits.
This is part of a pattern by Betsy DeVos and the Department of Education. They callously strip away basic student protections and illegally collect on student loans, all while blaming the courts, blaming servicers, and blaming the students themselves. The court will address these revelations by the Department at a status hearing on October 7.
Click here for the Project’s statement on this news.