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Data Show No Action on Borrower-Defense Claims

April 1, 2019
 
 

The total number of pending borrower-defense claims has continued to balloon in size over the past year. But the Education Department hasn't approved or denied any claims since June 2018, according to data released last week to the office of Senator Patty Murray, the ranking Democrat on the Senate education committee.

The data show that as of Dec. 31, there were more than 158,000 borrower-defense claims, an increase of nearly 50 percent in six months.

The department hasn't taken any new action on claims since a federal court ruled that a partial loan-relief formula established by Education Secretary Betsy DeVos was illegal. A court ruled last May that the partial relief system violated the Privacy Act. The court in June ordered the department to stop collecting on the loans of former Corinthian Colleges students who had sought loan relief.

A separate federal court ruled in October that a 2016 Obama administration borrower-defense rule should go into effect after consumer groups sued DeVos over her decision to block the rule.

Provisions of the Higher Education Act allow students to seek loan cancellation through a process called borrower defense if their college misled them or violated state law. As of June 2018, the Education Department had discharged more than $534 million in student loans with a median value of about $11,500.

The data released to Murray's office comes from the latest of the department's quarterly borrower-defense reports.

Murray pressed DeVos in a hearing last week to explain the department's inaction on the claims.

"There's nothing stopping you from providing full relief to struggling borrowers today. Surely there must be some of those borrowers who you feel deserve a full discharge," she said.

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