Devos erases loans for 1,500
Facing a federal lawsuit and mounting criticism, Education Secretary Betsy Devos on Friday said she will forgive loans for more than 1,500 borrowers who attended a pair of for-profit colleges that shut down last year.
Students who attended the Art Institute of Colorado and the Illinois Institute of Art from Jan. 20, 2018, through the end of that year will have their federal student loans canceled, Devos said, and students who attended another 24 schools owned by the same company can get their loans erased if they enrolled after June 29, 2018. The decision involves schools owned by the Dream Center company, which collapsed last year and shuttered campuses across the nation, following several other major for-profit college operators that have failed in recent years.
Devos has faced mounting criticism over her handling of federal loan forgiveness programs, which were expanded by the Obama administration following the collapse of Corinthian Colleges, which was accused of lying to students to get them to enroll.
Under Devos, the Education Department has stopped processing claims from students who say they were defrauded by their schools, leaving tens of thousands of borrowers in limbo as they seek loan cancellations. Devos has also moved to tighten eligibility rules, prompting backlash from Democrats and a flurry of lawsuits from students and advocacy groups.
In the latest case, the lawsuit said the department illegally released federal student aid to the Colorado and Illinois schools even after they lost the seal of approval from their accreditor. Losing approval should have made the schools ineligible for funding, the suit said, but they were allowed to keep operating without telling students that the institutions were in trouble.
But the department on Friday shifted blame to the accrediting group, the Higher Learning Commission, saying it assigned the schools a “newly developed and improperly defined accreditation status.” The department said it believes the schools should not have lost their accreditation and that, by revoking it, the accreditor left students with tarnished credits that might not be accepted by other schools.