In a call with reporters, a senior official said the department had reviewed the DeVos-era formula “and determined it was not granting an appropriate level of relief to borrowers,” given clear evidence they had been defrauded. The senior official said the formula relied on math that made it “very difficult if not impossible” for some borrowers to qualify for full relief.
The department estimates the change would ultimately help approximately 72,000 borrowers who have had their claims approved, but who received less than full relief under the previous formula — and that they will receive a combined $1 billion in loan cancellation.
The change revolves around a provision in federal law, commonly known as Borrower Defense, that allows borrowers who believe they have been cheated by a college or university to apply to have their debts erased. During the Obama administration, the Education Department approved thousands of claims from former students of Corinthian Colleges and ITT Technical Institute.
One department memo from the last days of Obama’s presidency begins: “Corinthian Colleges, Inc. (‘Corinthian’) consistently represented that all graduates obtained jobs after graduation or, relatedly, that its students were guaranteed employment after graduation. These representations were false and misleading. Accordingly, the Borrower Defense Unit recommends full relief for Corinthian borrower defense (BD) applicants.” Another memo, dated Jan. 10, 2017, arrived at the same conclusion for California-based students who alleged they were lied to by ITT Technical Institute, and likewise recommended full relief.
Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction