Education Department Will Soon Act on 95,000 Backlogged Borrower Defense Claims

By Allie Bidwell, Communications Staff

After a tumultuous first day of negotiations to rewrite borrower defense to repayment regulations, the rulemaking committee dove into issues related to circumstances under which borrowers may bring forward claims to have their federal loans discharged, how the Department of Education (ED) will determine if borrowers were harmed, and how to calculate damages.

But before the committee began its second day of negotiations, ED officials announced that it would begin recording the future negotiated rulemaking sessions – including Tuesday’s – and posting audio from the meetings online at a later date.

James Manning, acting under secretary of education, also addressed the committee and gave an update of the status of tens of thousands of borrower defense claims that have remained untouched since the Trump administration took office in January. Moving forward, he said, ED has approximately 95,000 borrower defense claims to process, up from the 87,000 recently reported by The Washington Post. But ED will soon begin issuing decisions on some of those claims, Manning said, some of which will be denials.

Democrats and consumer advocates have heavily criticized ED for allowing the backlog to grow so rapidly. Sens. Elizabeth Warren (D-MA) and Dick Durbin (D-IL) on Tuesday published a report detailing the growth in pending borrower defense claims since the Trump administration took office, and steps ED could take to move forward.

Manning blamed the slow progress in processing the claims on “inadequate infrastructure” in place for settling claims. He added that the Trump administration had “inherited” roughly 65,000 borrower defense claims from the Obama administration, more than 16,000 of which were approved before January.

But Manning said those decisions were made in haste and that ED decided to conduct a “high-level” assessment of the overall program, including already approved claims, due to the budgetary implications and the impact on students. Since completing that assessment, the majority of those previously approved claims have been discharged.

Additionally, because ED has been processing these claims under the existing 1994 regulations, Manning said the process has been slow because of the complexity of applying individual state laws to the claims. As ED begins issuing decisions on some of the 95,000 backlogged claims, Manning said that those borrowers whose claims end up being denied will have any accrued interest forgiven if their claims have been pending for more than one year.

“I can promise you we are working day and night to get [through] these claims, and I expect a consistent downward trend in the number of claims soon,” Manning said.


Publication Date: 11/15/2017

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