Judge orders Betsy DeVos to cancel 7,200 student loans from scammed borrowers
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For most of the Trump administration’s tenure, the US Department of Education, led by Betsy DeVos, has worked to limit the cancellation of student debt from borrowers who say they have been scammed by their schools.
The agency won the effort on Friday, when Democrats failed to muster enough votes to override President Trump’s veto on a bill that would have reversed the department’s approach to quashing the government. student debt under what is known as the “borrower defense” rule.
But on the same day, a court ruled on these borrowers’ right to have their debt canceled under the law. A judge ordered DeVos to write off the debt of 7,200 former for-profit Massachusetts students who had requested relief under the rule.
“No matter what the administration does, argues or says, people have rights and they can have those rights recognized in the courts,” said Toby Merrill, director of the Harvard Law School’s Predatory Student Loans Project. , who represented borrowers in Massachusetts. “The ministry can try to silence the concept that people have a right to pay off these bogus debts, but it can’t really erase the truth about it.”
Angela Morabito, spokesperson for the department, wrote in an email that the agency was considering the judge’s opinion.
Borrowers now eligible for debt cancellation attended the Massachusetts campuses of Corinthian Colleges, a for-profit college chain that collapsed in 2015 amid allegations the school used rates inflated placement and graduation rates to entice students into debt for low-value degrees. in the labor market.
Corinthian has reportedly targeted women of color specifically in its recruiting efforts, according to Merrill. About 80% of the school’s students were female, and three-quarters of their students in Massachusetts were black or Latinx, he said.
“It is not a neutral policy to ignore these fraudulent debts,” Merrill said. “It has a disparate impact on black communities and reinforces and exacerbates existing inequalities.”
Ongoing battle over borrower defense rule
The events of Friday were the latest developments in the battle over borrower defense rule. Although in the books since the 1990s, the rule was rarely used until 2015 following the fall of Corinthian. Former students of Corinthian and other for-profit colleges, organized by activists, began flooding the department with requests for debt relief. In response to this pressure, the Obama administration in 2016 created a streamlined process that borrowers could use to request debt cancellation.
Under DeVos, the ministry has increased the burden of proof for borrowers seeking to cancel their debt under the law. For example, the agency requires alumni to prove that they have been financially harmed by their school’s actions. Consumer advocates have said the DeVos version of the rule makes it difficult to obtain relief for borrowers who have been wronged by their schools.
The DeVos-era Department of Education and its supporters argued that their version of the rule would correct the Obama administration’s “overbreadth” and save taxpayers $ 11 billion over the next 10 years.
Consumer advocates, state officials and lawmakers have challenged the Trump administration’s approach to the rule both in court through multiple lawsuits – including one that resulted in a reparations judgment Friday – and through actions at the congressional and state level.
Earlier this year, Congress passed a bipartisan bill that would have overturned the agency’s version of the rule. Trump vetoed the bill and on Friday Democrats failed to muster enough votes to override the veto.
“We look forward to implementing the administration’s July 1 borrower defense rule that protects students from fraud, treats higher education institutions fairly and protects taxpayers,” Morabito wrote, Porte -speak of the department, in an e-mail.
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