On Tuesday, Politico reported that a federal judge in California has voided a settlement between the Department of Education and student loan borrowers, accusing Secretary Betsy DeVos of sabotaging the agreement by denying thousands of claims without legitimate cause.
“The class-action settlement, which was reached earlier this year and received preliminary approval from the court, was meant to force the Education Department to move faster on final decisions for roughly 160,000 of the backlogged requests for loan forgiveness, known as ‘borrower defense’ claims. Some of the claims have languished at the department for years,” reported Michael Stratford.
According to the report, the judge, William Alsup, “said he is alarmed that DeVos has in recent months responded by swiftly rejecting tens of thousands of the applications through ‘perfunctory’ denial notices. Of the applications in question in the class-action lawsuit, DeVos has denied 74,000 applications and granted 4,400 applications, which the judge noted was a denial rate of 94 percent.” Many borrowers, Alsup noted, waited months only to receive a form letter denying their claim with no explanation — a process he slammed as “disturbingly Kafkaesque.”
Allsup also said he would be authorizing depositions of as many as five officials from the Department of Education to explain the process used to deny the claims.
The loan forgiveness program is intended to help students who have accused their institutions of fraud, many of whom were given unrealistic promises about their program, their degree, or their own ability to repay the debt. Many of these schools, like ITT Technical Institute and Corinthian Colleges, were shut down after federal investigations into their business practices, but this left thousands of defrauded students on the hook for loans. Under DeVos, the Department of Education has fiercely resisted every effort to give these students financial relief.