Education Dept. plans to slash student loan forgiveness

Borrowers defrauded by for-profit colleges would only get partial relief

WASHINGTON — The Education Department’s plan to provide only partial loan forgiveness to some students defrauded by forprofit colleges could reduce overall payments by about 60 percent, according to a preliminary analysis obtained by The Associated Press.

The agency announced in December that 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 will now be getting 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 around 60 percent. To arrive at the initial estimate, officials looked at student loans that had been 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.”

Critics said the idea of partial relief was unfair since thousands of Corinthian students had already had their loans canceled in full under President Barack Obama. The agency said in December that it had tens of thousands of claims from Corinthian students pending.

The action comes as Education Secretary Betsy DeVos rewrites regulations governing student protections with regard to for-profit schools. Last year she froze two Obamaera rules that were meant to put additional checks on for-profits. Critics point to the Trump administration’s ties with the forprofit sector and accuse the department of protecting industry interests, but DeVos says the Obama-era rules were too broad and could be misused at taxpayers’ expense.