Judge DeVos criticizes widespread refusal to forgive student loan and cites “irreparable damage” to borrowers

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Federal judge issued scathing rebuke to Education Secretary Betsy DeVos for massively denying student loan requests for forgiveness.

“The Secretary’s new superficial refusal notices … contradict her original justification for the delay, raise substantial questions under [federal law], and may inflict irreparable harm on the class of student loan borrowers, ”Judge William Alsup of the U.S. District Court for the Northern District of California wrote in his decision yesterday.

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The last flight of Soft against DeVos concerns the program of defense against the repayment of the borrower in difficulty. the obama administration promulgated regulations governing this loan cancellation program in 2016 to provide student debt relief to students who have been misled, defrauded, or otherwise harmed by predatory colleges and universities – often schools for profit.

Under Secretary DeVos, however, the Department of Education tried to rewrite the rules governing the borrower advocacy program. New regulations that came into effect on July 1 of this year have significantly weakened borrower defense relief for student loan borrowers by increasing the burden of proof required to prevail and imposing a strict statute of limitations.

Borrower advocates have previously accused DeVos and the Education Department of deliberately delaying the processing of nearly 170,000 borrower advocacy claims, in some cases for years. A spokesperson for the U.S. Department of Education had previously disputed this, saying some requests had in fact been processed and the department had not processed additional requests due to an ongoing litigation.

A recent preliminary settlement agreement in the Soft against DeVos the case would force the Ministry to process the thousands of remaining delayed borrower defense submissions. However, as the settlement was being finalized, the student loan borrowers accused the Ministry of circumventing the spirit of the settlement agreement by essentially arbitrarily denying relief to nearly everyone.

“Since the preliminary settlement in Soft, [the Department of Education] has issued blanket denials of borrower defense demands, ”Project on Predatory Student Lending – which represents borrowers – said in August. “Reviews don’t make sense, [and are] in violation of the law and [settlement] agreement.”

Lawyers for the student loan borrowers informed the court of their concerns that the ministry was “issuing denials using catch-all, conclusive language that provides no rationale for the decision … Language is formula and does not give no indication that the Ministry has bound the evidence submitted by the borrower or otherwise possessed by the Ministry with its final decision.

Borrowers also noted that in some cases the decisions of the Ministry were “foolish”. Citing an example, the brief indicated a case where the borrower alleged that ITT’s Technical Institute had committed a fault relating to “educational services”. The Ministry denied the borrower any redress, stating simply: “This allegation fails for the following reason (s): educational services. In other cases, the Ministry says its decisions were based on unspecified evidence, which it then refused to provide to borrowers on request. The Ministry challenged the characteristics of its Borrower Defense decisions.

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This week, the court ruled in favor of the student loan borrowers and rejected the proposed settlement agreement. “The secretary’s new superficial denial notices undermine the proposed settlement,” Justice Alsup wrote. “The Court is disappointed to have come to this.”

In a remarkably blunt rebuke, Judge Alsup noted: “Simply put, where there is smoke, there is fire. After justifying eighteen months of delay largely in the backbreaking effort required to examine individual claims, distill common evidence and “achieve considered results,” the secretary [DeVos] charged out the gate, issuing superficial denial notices totally devoid of meaningful explanation at a breakneck pace.

With the proposed settlement agreement denied, litigation will now continue. And tens of thousands of student loan borrowers awaiting relief will continue to be in limbo.

Further reading

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How “Cancel Student Debt” Grew from a Fringe Idea to the Mainstream

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