Betsy DeVos: Income to Decide Education Loan Fraud Forgiveness

Betsy DeVos

Overburdened by education loan is a common narrative associated with almost every other student in the US, but what seems tough, is about to get tougher. As per the new plan unveiled by the US Education Department, students who are cheated by their colleges will receive full loan forgiveness, only if they end up earning far less than their peers.

The policy is an exact opposite to Obama era’s policy, which scrapped the entire amount in case of fraud. Also, this not the first, but second time that the reform has been pushed to provide only a partial loan.

The last attempt made in 2018 was blocked by a federal court after it concluded that the Education Department violated privacy laws to gather income information.

Meanwhile, Education Secretary Betsy DeVos said, policy is a fair resolution in comparison to the last “mess” inherited from the previous administration.

“We cannot tolerate fraud in higher education, nor can we tolerate furiously giving away taxpayer money to those who have submitted a false claim or aren’t eligible for relief,” DeVos said in a statement.

The policy works on the idea to determine how much of the federal debt should be taken off from the shoulders of children, rather than completely erasing under the Borrower Defense program.

The Obama administration expanded the policy in 2016 to eliminate the loans of thousands of students exploited by Corinthian Colleges chain, which shut down following findings that it had lied to students about job placement rates.

“We want to make sure we really serve the borrowers who truly have been the victim of misrepresentation and harmed by it,” Diane Auer Jones said. “We wanted to protect the taxpayers. There are people who believe we should forgive 100% but where does that end?” Jones added.

The filter applied will thus, help identify who is really in need depending on the earnings. The percentage fixed under the program is 25, 50, 75 and 100 per cent.

The policy, however, has also been subject to criticism from many who feel defrauded students should be completely compensated. “This partial denial scheme will force thousands of families to pay fraudulent debts that never should have existed in the first place. It shows that the Department of Education will stop at nothing to try to extract payments on invalid debts and deny students their rights under law,” said Eileen Connor, the group’s legal director.

Amidst the ongoing battle over the loan forgiveness, the ones suffering the most are those seeking relief. As per the stats, more than 200,000 claims are still pending.

Meanwhile, the Education Department and Betsy DeVos have said former Corinthian Colleges students that had their claims approved by the Obama administration will get full loan forgiveness. While other Corinthian students will get at least 10 per cent.


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