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State AGs Want Action on Student Loan Discharge

June 6, 2017
 
 

Nineteen state attorneys general and the head of Hawaii's Office of Consumer Protections wrote Monday that the Department of Education should consider abandoning individual review of loan discharge applications from former Corinthian College students. Instead, the department should grant automatic group discharge to student borrowers in cohorts where it has already determined fraud took place, they said in a letter to Secretary Betsy DeVos.

The state officials pointed out that move would not be without precedent -- the department in January granted loan discharge to former students of American Career Institute, a now defunct for-profit college chain in Massachusetts. DeVos has said the department will honor those discharge promises, although Massachusetts Attorney General Maura Healey, one of the officials who signed the letter, has repeatedly sought updates on when those loans will be forgiven.

Student borrowers who were victims of fraud or misrepresentation by their institution can seek to have their loans forgiven via a borrower-defense claim. The department has granted loan forgiveness to 27,000 former Corinthian students on an individual basis, although it has mostly resisted calls to grant automatic discharge to whole cohorts of students. Thousands of additional borrower-defense claims from students of closed for-profit colleges are still awaiting resolution by the department.

In the letter, the state officials sought more information on what the department is doing to process and resolve those claims.

"Relieving these hardworking Americans of their fraud-induced student debt will free them to participate more fully in their local economies, or even continue their educations with reputable schools," the letter said.

 
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