For-profit loan forgiveness program could see major cut
WASHINGTON — The Education Department’s plan to provide only partial loan forgiveness to some students defrauded by for-profit colleges could reduce overall payments by about 60 percent, according to a preliminary analysis obtained by the Associated Press.
The agency announced in December it was discontinuing the Obama administration’s practice of fully wiping out the loans of students deceived by the now-defunct Corinthian Colleges under the borrower defense rule.
The department said some students now will get only partial loan forgiveness to make the process fair and protect taxpayers from excessive costs. The agency will look at average income for specific programs to determine if the loans should be forgiven fully or partially. A department document drafted in the fall and viewed by the AP shows that such an approach could cut the overall amount of relief granted to students by about 60 percent. To arrive at the initial estimate, officials looked at student loans that were forgiven in their entirety to determine the impact had partial relief been granted.
Education Department press secretary Liz Hill said in a statement Tuesday, “This is not an official calculation from the Department of Education. It is an impossible calculation to make at this stage in the process as we continue to adjudicate claims.”
The action comes as Education Secretary Betsy DeVos rewrites regulations governing student protections with regard to for-profit schools.