July 27, 2017
Borrower defense to repayment, until recently an obscure provision of the Higher Education Act, allows borrowers to seek to have their student loan debt discharged if they were the victim of fraud or misrepresentation by their college or university. Education Secretary Betsy DeVos announced last month that she would suspend and overhaul an ambitious Obama administration borrower defense rule that established federal guidelines for discharge of loans. She said at the time that the department will continue to process claims submitted under existing rules.
But in response to an inquiry from Illinois Sen. Richard Durbin and four other Senate Democrats, acting Under Secretary James Manning said in a July 7 letter that no borrower defense claims had been approved since January 20, the beginning of the Trump administration. The department, meanwhile, received nearly 15,000 new borrower defense claims over the same period.
Manning stated in the letter to lawmakers that more than 65,000 claims were still pending review. The bulk of those — more than 45,000 — were from former students of Corinthian Colleges, the now defunct chain of for-profit institutions. (Manning included enclosures listing claims by state and institution.)
Liz Hill, a department spokeswoman, said department inherited a large backlog of borrower defense applications and is working to make progress on reviewing those claims.
“We are diligently looking to set up a process to start approving claims once again,” she said.
DeVos in May told lawmakers that the department would honor borrower defense claims already approved by the previous administration after multiple unanswered inquiries from Congressional Democrats and state officials. The Associated Press reported last month that about 7,000 — less than half — of those claims had been discharged. The department has been working to discharge the remainder of those approved claims before beginning the review of new claims.