Wednesday, January 20, 2021

US might partially forgive bad for-profit student loans


The Associated Press reports that the US Education Department is considering a new plan that would partially forgive student debt if that debt was incurred as a result of fraud by for-profit colleges.

Citing unnamed sources, the AP noted that the department has issued multiple reports that show the “partial forgiveness” strategy is under consideration. If enacted, it would represent a drastic shift from the department’s policy during the Obama administration, which canceled more than half a billion dollars of student-loan debt for defrauded students.

Some student advocates see the move as just another sign that the Trump administration has close ties to for-profit colleges, even to ones that defraud students so they can get their hands on the government’s money and saddle often poor students with a lifetime of debt.

“Anything other than full cancellation is not a valid outcome,” the AP quoted Eileen Connor, a litigator at Harvard University’s Project on Predatory Student Lending, as saying. The group has represented many defrauded students from the now-defunct Corinthian Colleges. “The nature of the wrong that was done to them, the harm is even bigger than the loans that they have.”

Education Secretary Betsy DeVos has been criticized for her delay in processing tens of thousands of applications for loan forgiveness from defrauded students.

“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,” Forbes quoted US Senator Dick Durbin, an Illinois Democrat, as saying in a statement a few months back. “The department can’t ignore these borrowers any longer.”

Paul Katula
Paul Katula is the executive editor of the Voxitatis Research Foundation, which publishes this blog. For more information, see the About page.

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