Judge condemns DeVos for rejecting 94% of requests for student loan relief

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Months after pledging to process a backlog of 160,000 loan cancellation requests from students who say they were scammed by their schools, the US Department of Education has rejected 94% of the requests it reviewed , according to a federal judge who asks for a justification for the “frantic pace” of denials.

In a biting ruling in California on Monday, US District Judge William Alsup said the department denied the allegations using model letters “in an alarming way.” Alsup threatened to suspend the agency from rejecting further requests, saying its approach “puts borrowers dry.”

He said that although Education Secretary Betsy DeVos blamed the backlog on the hard work required to process complaints, she now “charged immediately, issuing superficial denial notices completely devoid of meaningful explanation to a frantic pace “.

The education ministry said it was reviewing the decision. Spokeswoman Angela Morabito said there have been many requests submitted by borrowers who have participated in ineligible programs or who have not submitted a valid loan cancellation request.

“The mere fact that an application has been filed does not make it valid and eligible for taxpayer-funded relief,” she said in a statement. “The ministry is following the publicly available process to resolve complaints as quickly as possible, so that eligible and aggrieved students get the help they deserve.”

The dispute stems from a 2019 lawsuit filed by 160,000 borrowers who claim the education ministry illegally blocked their requests for loan relief. The claims were filed through a program known as Borrower Defense, which forgives federal student loans to borrowers cheated by their colleges. It is most often used by students who attended for-profit colleges.

In a settlement proposal in April, the Ministry of Education agreed to deal with the backlog of applications within 18 months. But Alsup canceled the deal on Monday, saying it was undermined by the recent wave of rejections. Instead, he called on the trial to continue and he allowed the testimony of up to five ministry officials to explain the denials.

“We need to know what’s really going on,” wrote Alsup, who was appointed to the court by President Bill Clinton. He said DeVos would not be required to appear for filing “at this time,” but suggested it might be necessary later.

DeVos set out to revamp the loan cancellation program in 2017 and last year released new rules that made it harder for borrowers to write off their loans. Meanwhile, claims were piling up. When the lawsuit was filed, it had been a year since the department had made a final decision on any claim.

The program was expanded by President Barack Obama to wipe out loans from students attending Corinthian Colleges and other for-profit colleges who allegedly lied about the success of their graduates. DeVos opposed the expansion, saying it was too easy for students to write off their loans at the expense of taxpayers.

Alsup’s decision was based on the department’s latest update on its work to clear the backlog. By August, he wrote, the agency had rejected 74,000 lawsuit-related claims while granting 4,400, a rejection rate of 94%.

The rejections were forwarded through standardized letters with information on how to appeal the decision, but Alsup said the letters did not explain the decision. This leaves borrowers in a “Kafkaesque troubled” situation, he wrote.

Alsup said he plans to ban the department from issuing further releases until the case is decided. He asked both sides to submit arguments around the issue.

The Harvard Law School’s Predatory Student Loans Project, which represents the borrowers in the lawsuit, said it was eagerly awaiting the removal of agency officials for an explanation for their actions.

“The group members in this case have suffered prejudice every turn, but in this court order they finally see a change in the trend after years of waiting for justice to be served,” said Eileen Connor, director. legal group.

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