Trump administration halts student loan claims against fraudulent colleges

Since Donald Trump assumed the White House in January, records show the Education Department has taken no initiative to approve applications for student loan forgiveness in fraudulent cases.

The Borrower Defense Rule allows students to get their federal loans forgiven, only if a school takes part in deceptive practices to encourage them to borrow debt.

Scheduled to become effective July 2, Education announced that the rule’s repayment schedule will be delayed so the department could rewrite two rules that would have made it easier for borrowers to get their loans forgiven.

Sen. Richard Durbin (D-Ill.) and four other senators questioned the department over concerns they had on student-loan forgiveness.

“This response shows that while the Department of Education has illegally delayed the new borrower defense rule, it has also stopped processing federal student loan relief under current regulations for tens of thousands of defrauded borrowers,” Durbin said in a statement.

According to Forbes, in 2017 alone there’s been nearly 15,000 borrower defense applications submitted to the Department of Education. During the President Obama’s White House tenure, there were more than 28,000 student applications approved.

Out of those claims, students have submitted cases against Corinthian, ITT Tech, University of Phoenix and DeVry.

Secretary Betsy DeVos told this year’s applicants that the claims will be granted as fast as possible. Students may place their  loans in forbearance during the claim’s waiting period. But forbearance only lasts six months, which has made the delay controversial among students.

Acting Education Under Secretary James Manning wrote in response to Sen. Durbin’s inquiry that borrowers could have their forbearance extended if their applications are still pending review.

New applications are likely to increase as 2017 progresses. Overall, there’s more than 65,000 pending claims to be granted.  It’s also been speculated that top officials in the department aren’t being briefed on the rule’s progress, according to reports sent to Durbin.

“No borrower defense applications have been approved between Jan. 20, 2017, and today,” Manning admitted to Durbin.

This leaves students with one question in mind: When will the federal government begin to grant the claims?

The Education Department has given educational institutions until July 1, 2018 to carry out the rule.


[AP] [Forbes]