By Allie Bidwell, Communications Staff

In the last six months since President Donald Trump took office, the Department of Education (ED) said it has processed no new claims from students seeking debt relief under the borrower defense rule, leaving tens of thousands of students in the lurch.

The news came in a newly-released letter that ED sent earlier this month to Sen. Dick Durbin (D-IL), who along with Sen. Chuck Schumer (D-NY), Sen. Patty Murray (D-WA), and Sen. Sherrod Brown (D-OH) in May requested more information on the apparently stalled process in approving borrower defense claims. In their previous letter, the senators said ED "must uphold its responsibility to provide relief for the students whose lives were disrupted by fraudulent institutions."

But in its response, ED confirmed that as of July 7, 2017, it had not yet processed any new borrower defense claims. Although the majority of those claims were filed before the Trump administration took office, nearly 15,000 claims have been filed on or after Jan. 20, 2017, according to the letter, written by Acting Undersecretary James Manning.

In total, more than 65,000 claims are currently "pending review, decision, or adjudication," according to ED, the vast majority of which have come from students who attended Corinthian Colleges (45,092), or ITT Technical Institutes (7,186). When other claims from students who attended Education Management Corporation (EDMC), DeVry University, and Apollo Group (University of Phoenix) are included, the total accrued outstanding amount comes to just over $143 million.

"With the large backlog of claims we inherited from the Obama administration, we are working diligently to set up a process to start approving claims again," ED spokeswoman Liz Hill told The Washington Post.

The delay could have other consequences for borrowers who placed their loans in forbearance while waiting for approval. According to the letter, as many as 31,000 borrowers could see their forbearance expire. Manning said, however, that a "process is in place to extend any forbearances prior to expiration" if the borrower's claim has not been fully processed.

The future of the federal rule as a whole, though, is in question. Education Secretary Betsy DeVos announced in June that ED would halt and seek to rewrite the rule, which allows borrowers to seek debt forgiveness in certain situations, such as if their schools closed, or if they felt they were defrauded by their schools.

At the time, DeVos said ED would continue to process the claims under the current rule, which has been in place since 1995, but was rarely used before the collapse of Corinthian Colleges. ED plans to postpone the July 1 effective date of the new borrower defense rule "due to pending litigation" challenging the rules.

A group of Democratic senators not long after DeVos' announcement wrote to ED, urging the agency to fully implement the rule, saying the department's justifications for postponing and rewriting the rule were "legally questionable, inconsistent, and clearly prioritize the concerns of special interests over those of struggling students and families."

Since the announcement, ED has hosted two public hearings to gather feedback from stakeholders on its intent to renegotiate the borrower defense rule, as well as the gainful employment rule established under the Obama administration. Moving forward, ED will gather the topics of negotiation drawn from the public comment and send a request for nominees to form a negotiating committee.

Publication Date: 7/27/2017

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