Scott Statement on ED’s Latest Action to Harm Defrauded Students

December 20, 2017
Press Release

As originally released by the Committee on Education and the Workforce, Democrats

WASHINGTON D.C.  – Ranking Member Bobby Scott (VA-03) issued the following statement after the Department of Education (ED) announced a new process for assessing and awarding borrowers defense to repayment claims submitted by former students of the now-closed Corinthian Colleges.

“Today’s action by the Department of Education will short-change thousands of students defrauded by the now-defunct Corinthian Colleges, Inc.

“By structuring financial relief according to earnings in comparison to other career programs, Secretary DeVos is implementing an unjust system. It is nonsensical for defrauded students who earn 49 percent of what they should be earning to receive full relief from their loan debt, while students earning just one percentage point more are relieved of only half of the debt. No student should be forced to repay any of the loans incurred to attend an institution found to have provided a worthless education.

“It makes even less sense that many of the defrauded students who submitted their claims before the Trump administration took office received full relief – regardless of earnings. By December of last year, the Obama administration had processed more than 28,000 claims and provided $558 million in relief to defrauded Corinthian students. The Trump administration has failed to act, allowing the backlog of unprocessed claims to explode.  So much so, that the Department’s own Office of the Inspector General recently chastised its failure to act on claims in a timely fashion. Instead of using the system already in-place, Secretary DeVos has chosen to reinvent the wheel. As a result, student borrowers will pay the price.

“The mechanism now being used by the Department to determine relief for students, earnings derived from the Gainful Employment rule (GE), is particularly troubling. Despite being finalized in 2014, the Secretary has used questionable pretenses to delay GE implementation.  It is inconsistent to suggest that the 2014 GE rule is not a good measure of program quality, yet still using that same rule’s rate calculations to now deny loan relief to borrowers.

“I urge Secretary DeVos to revisit this process. In the meantime, I offer the same advice I gave Secretary King in 2016: ‘A strong group discharge process must be transparent and speedy to help students gain closure from the deceptive and predatory practices they faced. To expedite these claims, the Department should add a rebuttable presumption that students are entitled to full relief. The time, complexity, and expense necessary to determine exactly what relief is due adds insult to the injury these students experienced.’”

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