15,000 defrauded borrowers to have their student loans forgiven after judge rules against DeVos

Finally, borrowers will receive relief.

U.S. Education Secretary Betsy DeVos speaks during a dinner hosted by the Washington Policy Center, Friday, Oct. 13, 2017, in Bellevue, Wash. CREDIT: AP/Ted S. Warren
U.S. Education Secretary Betsy DeVos speaks during a dinner hosted by the Washington Policy Center, Friday, Oct. 13, 2017, in Bellevue, Wash. CREDIT: AP/Ted S. Warren

After Education Secretary Betsy DeVos lost a lengthy court battle, the Education Department announced Thursday that it would cancel $150 million in student loan debt for 15,000 borrowers.

The department has tried for over a year to stop an Obama-era rule that provides relief for students who had been defrauded by their colleges. For-profit colleges, in particular, have been guilty of scamming students into ineffective programs and saddling them with debt and credits that don’t transfer. Many of the students who will be receiving debt relief attended for-profit colleges.

The saga started in June 2017, when the department announced it would halt implementation of the Obama-era rule was supposed to take effect on July 1. The department delayed the regulations until 2019 to implement updates, with DeVos justifying this by calling the proposed changes “a muddled process that’s unfair to students and schools.”

In September, U.S. District Court Judge Randolph Moss ruled that DeVos’ actions to stall protections for defrauded students were illegal and that her decision to move forward without a rulemaking process was “procedurally invalid” and “arbitrary and capricious.” Attorneys general for 18 states and the District of Columbia brought the lawsuit against the Department and Secretary DeVos.


Borrowers, student debt relief advocates, and Democratic lawmakers have fought the DeVos Education Department for months to ensure students get relief. In November of 2017, Sens. Elizabeth Warren (D-MA) and Richard Durbin (D-IL) released a report on the backlog of debt relief claims, since no borrower defense claims had been approved at the time. In December, the department announced it approved 12,900 claims and denied 8,600 submitted by former students at Corinthian Colleges, a now defunct for-profit college chain.

About half of the borrowers receiving relief from student debt attended schools that were part of the Corinthian College network. In 2015, the department said it would fine Corinthian Colleges $30 million for misleading students, adding that Corinthian’s Heald College showed a pattern of falsifying post-graduation data, such as job placements. For instance, one Heald campus considered a 2011 Business Administration graduate as employed in her field due to working in a seasonal clerk position at Macy’s, even though her job actually ended before she graduated. Other borrowers who received relief attended schools that shut down between Nov. 2013 and Dec. 2018.

Sen. Patty Murray (D-WA), ranking member of the Senate Health, Education, Labor and Pensions Committee, released a statement on Thursday saying that this relief isn’t good enough for defrauded student borrowers.

“I call on Secretary DeVos to abandon her attempts to rewrite the borrower defense rule to let for-profit colleges off the hook and instead fully implement the current rule and provide relief to more than 100,000 borrowers who were cheated out of their education and savings,” Murray stated.


Regardless of whether students can prove fraud, students who attend for-profit colleges, many of whom are already economically disadvantaged, are likely to end up struggling with debt. Low-income students, single mothers, and students of color, in particular, often take on a great deal of debt by attending these schools. Single mothers made up 30 percent of undergraduate students enrolled in private, for-profit educational institutions from 2011 to 2012, according to a 2017 report by the Institute for Women’s Policy Research. And 35 percent of Black students took out $8,900 or more in federal loans for for-profit colleges in the 2011–12 academic year, compared to 19 percent at public universities, according to a report by the Center for Responsible Lending.

A study 2016 study looking at low-income Black students’ college decisions, found that 53 percent of students pursued for-profit trade schools but, still, many who attended for-profits had more debt and fewer job prospects than they likely would have at non-profits. Only 31 percent of those students earned certification.

Researchers found that low-income Black students chose for-profit colleges after seeing television ads that emphasized how short the programs were, a point that appealed to students’ interest in getting to work as soon as possible. But those schools don’t often allow students to easily switch programs, resulting in students accumulating more debt as they try to pursue their shifting career interests.

Jessica King, a single mother who attended Everest College, which was owned by Corinthian Colleges, told ThinkProgress in 2015 that she has over $30,000 in student loan debt. She left a program to become a medical assistant once she began to doubt the college’s legitimacy. She said, “I’d love to be able to go back to school and get a degree and my finish up my hopes and my dreams, but I think Everest robbed me of that …”

Jenny Lezan, a student who attended the for-profit colleges the Illinois Institute of Art — Schaumburg and Illinois Institute of Art — Chicago, part of a college chain that has been the subject of investigationstold ThinkProgress in July that as a Latina and first-generation college student, she wanted to “help break the cycle of poverty” by going to college.

“I thought I was making a financial decision that was going to help me break free of poverty,” Lezan said. “Here I am, 10 years later, and I’m barely out of debt. And I’m probably worse off than my mother who didn’t go to school.”