November 14, 2017

New Report Highlights Betsy DeVos's Failure to Cancel Student Loans of Nearly 90,000 Defrauded Students

Warren, Durbin Call for Full, Immediate Relief, Offer Recommendations; Report Details the Personal Stories of Defrauded Students from Massachusetts, Illinois, California, Tennessee, Arizona, Washington, Wisconsin, Indiana

Insult to Injury: How the DeVos Department of Education is Failing Defrauded Students (PDF)

Text of the letter to Secretary DeVos (PDF)

Washington, DC - United States Senators Elizabeth Warren (D-Mass.) and Dick Durbin (D-Ill.) today released a report detailing how the Department of Education (ED) and Secretary Betsy DeVos have failed tens of thousands of Americans by refusing to cancel the loans of students who were defrauded by predatory colleges. Senators Warren and Durbin also led 14 of their Senate colleagues in sending the report directly to Secretary DeVos, urging her to read the report's stories of defrauded borrowers, and to respond to the report's recommendations.

Following the collapse of for-profit giants Corinthian Colleges and ITT Technical Institute, thousands of students were left with a useless education and massive amounts of debt, leading many to apply to the federal government for relief from their student loans. Under the Borrower Defense to Repayment provision of the Higher Education Act, ED has the legal authority to provide defrauded students with complete, immediate, and automatic relief from their federal student loans - but the Trump Administration and Secretary Betsy DeVos have refused to discharge a single loan, leaving nearly 90,000 students waiting for relief.

"The law says that when a predatory college breaks the law to trick students into enrolling, those students are entitled to have their federal student loans cancelled to help them start over," said Senator Warren. "But as this report outlines, Betsy DeVos's outright refusal to help these students is taking a serious toll on their lives. Enough is enough -- it's time for Betsy DeVos to step up and do the right thing."

"The widespread fraud committed by Corinthian Colleges and ITT Tech wreaked havoc on the lives of tens of thousands of students nationwide, leaving them with high levels of debt, poor job prospects, useless degrees and credentials, and in many cases no degree at all," said Senator Durbin. "We can't leave these students holding the bag. The Department should immediately provide the full relief to which these and other defrauded borrowers are entitled under the law."
The report by Senators Warren and Durbin found, based on data provided by ED, that since Secretary DeVos took office, not a single borrower defense claim has been approved. Additionally, the total number of pending borrower defense claims have increased under the Trump Administration, growing from 65,169 in July of 2017 to around 87,000 in October. The report further found that some borrowers have been waiting more than two years for their claims to be processed, and detailed the experiences of eight students from across the country.

  • Erica C., Massachusetts: Erica, a single mother of three, attended Everest College (Corinthian) in the hopes of starting a new career in a hospital. Instead, she wound up with a worthless degree and $15,000 in student loan debt, which she has worked hard to repay. She submitted a Borrower Defense application in October of 2016, but has yet to receive a substantive response from ED. "Everest failed to teach us valuable information, we thought we would all get good paying jobs, when we would call them (for job assistance), no one would help," said Erica. "I am not asking for the money I paid, but if they can eliminate the money I owe that would help." 
  • Ami Schneider, Illinois: Ami, a first-generation college student, enrolled at The Illinois Institute of Art to become a photographer, but was quickly disappointed by the quality of the education she received, and the lack of opportunities available after she graduated. After taking out $100,000 in student loans and being unable to find gainful employment, Ami was forced to file for bankruptcy. She has yet to receive a substantive response from ED on her borrower defense claim. "The school defrauded me plain and simple, and I have the evidence," said Ami. 

In the report, Senators Warren and Durbin offered nine specific recommendations for ED to bring relief to the thousands of students applying for borrower defense:

  1. Immediately provide full discharges to the remaining students with borrower defense claims approved prior to January 20, 2017 who have yet to receive relief;
  2. Immediately begin processing borrower defense claims in order to reduce the current backlog of 87,000 claims; 
  3. Commit to providing full relief for future claims, as opposed to partial relief reportedly under consideration by some ED officials; 
  4. Provide full, automatic discharges to Corinthian students covered by previous ED findings that entitle covered students to expedited borrower defense discharges; 
  5. Work with state Attorneys General and federal agencies to issue similar findings of wrong-doing against the now-defunct ITT Tech, and identify affected students in order to provide full, automatic discharges;
  6. Extend forebearance for all borrowers with pending claims;
  7. Use evidence and information submitted by state Attorneys General to provide full, group discharges to affected students;
  8. Implement the Senate Labor, HHS, Education Appropriates Subcommittee directive to provide quarterly public reports on the receipt and processing of borrower defense claims; 
  9. Immediately halt collections activity on defaulted borrowers with pending borrower defense claims and all defaulted Corinthian borrowers. 

Senators Sherrod Brown (D-Ohio), Bernie Sanders (I-Vt.), Kamala Harris (D-Calif.), Tom Carper (D-Del.), Kirsten Gillibrand (D-NY), Tammy Baldwin (D-Wis.), Jack Reed (D-R.I.), Ben Cardin (D-Md.), Sheldon Whitehouse (D-R.I.), Dianne Feinstein (D-Calif.), Tammy Duckworth (D-Ill.), Al Franken (D-Minn.), Edward J. Markey (D-Mass.), and Richard Blumenthal (D-Conn.) also joined Senators Warren and Durbin in calling on Secretary DeVos to review and respond to the report's recommendations.

This is the first report in DeVos Watch, Senator Warren's effort to conduct oversight of Secretary Betsy DeVos's Department of Education. See other DeVos Watch activity here.

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