Full loan relief rare at for-profit colleges
WASHINGTON — The Trump administration is granting only partial loan forgiveness to the vast majority of students approved for help because of fraud by for-profit colleges, according to preliminary Education Department data obtained by The Associated Press.
The figures demonstrate the effect of Education Secretary Betsy DeVos’ new policy of tiered relief, in which students swindled by for-profit schools are compensated based on their earnings after the program.
Of the roughly 16,000 fraud claims approved thus far by the Education Department under DeVos, slightly more than 1,000 students received full forgiveness on their loans, according to an AP analysis of the data.
DeVos has been pushing to ease regulations for the for-profit sector and raise the bar for students seeking relief for fraud. Critics say DeVos, who has hired officials from the for-profit sector to top positions in her agency, is favoring industry interests. But DeVos counters that the previous approach was unfair to taxpayers who ended up paying for those forgiven loans. She says the new process will enable students to get their claims considered more quickly and efficiently and will be more balanced instead of an “allor-nothing” approach.
More than 165,000 claims have been filed since the loan forgiveness program launched in full in 2015 under the Obama administration. A total of nearly 48,000 claims have been approved through the end of June.
Since DeVos took over, the agency has reviewed more than 25,000 claims.
Partial forgiveness awards have covered on average about 30 percent of a student’s outstanding loan, with the median loan of roughly $11,500 reduced to about $7,800, according to the data. The department computes the amount erased by comparing their income to peers in similar programs.
The statistics were collected over the summer in preparation for a report on loan relief claims that the agency must submit to Congress. The department has previously not provided such information publicly.