Warren Asks Inspector General to Review ED's Use of Earnings Data for Loan Discharge

By Allie Bidwell, Communications Staff

Less than two weeks after the Department of Education (ED) announced it would use federal earnings data to determine the amount of debt relief for successful borrower defense claims, Sen. Elizabeth Warren (D-MA) called for the Inspectors General of two federal agencies to review the data use, claiming the move may violate ED's information exchange agreement with the Social Security Administration (SSA).

Late last month, ED announced it would use a new tiered relief system to process borrower defense claims. Under the new system, students will receive full relief as a result of their claims only if their earnings are currently less than 50 percent of their counterparts' from passing gainful employment (GE) programs. Students earning at least 50 percent of what their peers earn from programs that pass GE standards will be compensated proportionally for the difference.

"We have been working to get this right for students since day one," Education Secretary Betsy DeVos said in a press release at the time. "No fraud is acceptable, and students deserve relief if the school they attended acted dishonestly. This improved process will allow claims to be adjudicated quickly and harmed students to be treated fairly. It also protects taxpayers from being forced to shoulder massive costs that may be unjustified."

Following the announcement, some in the higher education community expressed concern that the type of earnings data used would not accurately capture whether a borrower is gainfully employed, because the data would not take into account whether a borrower is employed in his or her field of study, and the passing incomes would be relatively low. And at least one state attorney general said the tiered relief system is "illegal."

In a letter sent Tuesday to the Inspectors General for both ED and SSA, Warren said the information exchange agreement between the two agencies only covers data exchange under the gainful employment rule — not borrower defense.

"I am troubled by the Department's potential misuse of federal earnings data acquired from SSA through an information exchange agreement in order to determine the amount of loan relief for defrauded students," Warren wrote in the letter. "There is no evidence of a new data exchange agreement between the Department and SSA for use in borrower defense determinations, nor has there been a revision to the gainful employment information exchange agreement."

ED's announcement also came shortly before negotiators will reconvene for the second negotiated rulemaking session on a new borrower defense regulation, which will take place next week in Washington, DC.


Publication Date: 1/3/2018

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