Debt relief for defrauded students halted under Trump, says report

Debt relief for defrauded students halted under Trump, says report


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Education secretary Betsy DeVos has delayed putting in place debt relief rules

The US Education Department has stopped cancelling student debts for people defrauded by failed for-profit schools, according to its Inspector General.

A new report by the independent auditor says affected borrowers face mounting interest and other financial burdens.

Before leaving office, President Barack Obama passed new laws speeding up debt cancellations for defrauded students.

But under President Donald Trump and his Education Secretary, Betsy DeVos, cancellations have ground to a halt.

Ms DeVos has delayed the implementation of Mr Obama’s reforms, saying they would create costs for taxpayers.

According to the Inspector General’s report, the Education Department under Ms DeVos has received 25,991 debt cancellation claims, denying two and approving none.

During Mr Obama’s final months in office, from 1 July 2016 to Mr Trump’s inauguration in January 2017, the Education Department received 46,274 claims, approving 27,986 and denying none.

In 2015, a huge for-profit school network, Corinthian Colleges, collapsed after investigations into fraud and malpractice in the company led the government to cut off federal funds.

Nearly 80,000 students were left facing debts to the Education Department, despite the department having authority to cancel students’ debts when schools have violated students’ rights or broken the law.

Senator Patty Murray, the senior Democrat on the Education Committee, said: “Hundreds of thousands of students were defrauded and cheated by predatory colleges that broke the law, but today’s report confirms Secretary DeVos tried to shirk her responsibility to these students and shut down the borrower-defense program, leaving them with nowhere to turn.”

A Wayne Johnson, chief operating officer of the federal student aid programme, said that the Education Department would soon approve 11,000 claims for Corinthian students and had “authorised an interest credit” for long-term outstanding claims.


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