Judge slams DeVos for rejecting 94% of loan relief claims

Months after vowing to process a backlog of 160,000 requests for loan forgiveness from students who say they were defrauded by their schools, the U.S. Education Department has rejected 94% of claims it has reviewed, according to a federal judge who is demanding justification for the “blistering pace” of denials.

In a biting decision issued Monday in California, U.S. District Judge William Alsup said the department has been denying claims using template letters that are “alarmingly curt.” Alsup threatened to suspend the agency from rejecting further requests, saying its approach “hangs borrowers out to dry.”

He said that although Education Secretary Betsy DeVos blamed the backlog on the hard work that goes into processing claims, she has now “charged out of the gate, issuing perfunctory denial notices utterly devoid of meaningful explanation at a blistering pace.”

The Education Department said it is studying the ruling. Spokesperson Angela Morabito said many claims were submitted by borrowers who attended ineligible programs or who failed to make a valid claim for loan forgiveness. “Just because a claim was filed does not make it valid and eligible for taxpayer-funded relief,” she said in a statement.

The dispute stems from a 2019 lawsuit brought by 160,000 borrowers who say the Education Department illegally stalled their claims for loan relief. The claims were filed through a program known as borrower defense, which forgives federal student loans for borrowers who are cheated by their colleges. It’s most often used by students who attended for-profit colleges.

In a proposed settlement in April, the Education Department agreed to process the backlog of claims within 18 months. But Alsup scrapped the deal Monday, saying it was undermined by the recent spate of rejections.