Watchdog: Student debt relief unit cut as claims mounted

As thousands of applications for student debt forgiveness poured into the U. S. Education Department, the Trump administration cut the staff working on the claims and ordered a halt to an overhaul of the system, according to the agency’s inspector general.

The result: Claims lingered month after month.

A letter fromthe agency watchdog to Sen. Richard J. Durbin, D-Ill., obtained Wednesday by The Washington Post, sheds light on the Education Department’s controversial handling of more than 100,000 debt relief claims submitted by defrauded student loan borrowers.

The unit charged with sifting through applications began developing protocols to simplify the process in January 2017. But James Manning, then an acting undersecretary, directed the unit to stop, according to the letter.

Education Depar tment staff wanted to create more categories to sort the allegations made by former Corinthian College students, who constituted the lion’s share of applications. Manning quashed that plan and halted the entire approval system, arguing that the new administration needed more time to review existing polices.

While Manning evaluated those policies and asked the inspector general to do the same, the Office of Federal Student Aid reduced the number of contractors staffing the unit by more than twothirds. Not a single application was approved or denied for almost a year, though the Trump administration had received more than 25,000 new sub- missions.

“If Mr. Manning wants to provide the flimsy excuse that this work was halted as part of a routine review by the new administration, I have a simple question for him: Have you ordered that work to be restarted, and provided the necessary personnel and resources to carry it out?” said Durbin, who in May requested more info on the claims process fromthe inspector general.

Education Department spokesman Chris Greene said the agency has hired more contractors since restarting the claims process in December. The department has the authority to forgive federal student loans when a college uses illegal tactics to persuade a student to borrow money, under a federal statute known as borrower defense to repayment.

Greene noted that while the inspector general reviewed the process, the claims unit continued to develop a database to manage applications and test methods of improving the systemto “ensure they met policy objectives and legal requirements.”

The department instituted a policy providing relief to Corinthian borrowers by comparing the average earnings of students in similar vocational programs— a strategy that is the basis of an ongoing lawsuit.

In December, the inspector general issued a report admonishing the department for failing to clear the backlog of debt relief applications. The report acknowledged that the procedure for processing claims needed improvement, but it said the system worked well enough that there was no excuse for the Trump administration and Education Secretary Betsy DeVos to halt operations.