Student loans

Borrowing groups sue Biden administration over stalled student loan forgiveness requests

A group of student loan advocacy organizations filed a lawsuit Thursday against the Biden administration, accusing officials of delaying processing a collective request for student loan cancellation for borrowers who were defrauded by their school. Many borrowers have been waiting years for relief.

“Although the Department was slow to respond … borrowers struggled under the burden of these loans, in some cases having to choose between paying their student loan bills and paying for other necessities like food and rent,” said Kyra Taylor, staff attorney. at the National Consumer Law Center, one of the organizations involved in the lawsuit. “The Ministry of Education must act quickly when it becomes clear that a school has harmed students. This shouldn’t leave students in limbo paying off debts that should be cancelled.

Student loan forgiveness for borrowers defrauded by their school

The student loan forgiveness program at issue in the new lawsuit is the borrower’s defense until repayment program. Borrower Defense can write off federal student loan debt for borrowers who have been defrauded by their school (often, predatory, for-profit schools) through misrepresentation and other illegal behavior related to the essentials of a degree or certificate program, such as admission requirements, acceptance and transferability of credits to other educational institutions, and career prospects.

The borrower defense program has been mired in political and legal battles for years. Regulations governing the new program were first established by the Obama administration in 2016. But under the Trump administration, the Department of Education later rewrote the borrower defense rules and increased the burden of proof required for a student to prevail on a claim. The Department has also reduced the relief available to borrowers by imposing a policy of partial relief, allowing (in some cases, at least) minimal student loan forgiveness even for approved applications.

The Biden administration has since repealed the Trump-era partial relief policy and worked through a massive backlog of tens of thousands of unaddressed borrower defense requests. The administration is also working on a new overhaul of the regulations relating to the defense of borrowers. The administration also touted nearly $2 billion in approved student loan forgiveness for 105,000 borrowers under the Borrower Defense Program.

Yet many student borrowers have waited years for help after submitting Borrower Defense Claims. And many still don’t know where they stand.

Student borrowers who attended a predatory school still haven’t had their loans forgiven

The lawsuit filed this week concerns graduates of Westwood College, a for-profit school that closed in 2015 following allegations of ‘material misrepresentation about graduates’ likely employment prospects’ and credit transferability. , according to the Ministry of Education.

The Illinois Attorney General’s Office filed a Group Release Request for Borrower Defense of Reimbursement with the Department of Education on behalf of defrauded Illinois students who completed the Criminal Justice from Westwood College. But student loan advocacy groups allege the Department for Education never acted on the group’s request, leaving hundreds, if not thousands, of student borrowers saddled with unnecessary degree debt.

Earlier in May, Illinois Attorney General Kwame Raoul sent a letter to the Biden administration urging the Department of Education to grant the Westwood Group borrowers’ defense request. “There is no further analysis or proof needed: Westwood defrauded every student who completed his Illinois criminal justice program,” Illinois AG Raoul wrote. “The Department – ​​and only the Department – ​​knows which defrauded borrowers continue to incur federal debt while in Westwood. These consumers continue to be harmed by the student loan debt they carry and its negative impact on their lives.

The coalition of organizations that filed the complaint argues that a disproportionate number of these borrowers are students of color. “From 2004 to 2015, Westwood’s student population was approximately 44% Black and 21% Latinx, nearly three and one and a half times the average statewide enrollment among those groups respectively. “, the coalition said in a statement.

“The Department of Education’s failure to act disproportionately – and unjustifiably – is failing low-income Black and Latino borrowers who are especially burdened with unaffordable and unfair debt after generations of discriminatory and government-sanctioned policies. government that deprive communities of color of wealth,” Geneviève said. Bonadies Torres, associate director of the Educational Opportunities Project with the Lawyers Committee for Civil Rights Under Law. “By neglecting its legal obligations to defrauded students who are entitled to redress, the Department’s inaction exacerbates existing racial disparities in academic achievement and economic opportunity.”

The trial, Hemphill v Cardona, was filed in the United States District Court for the District of Columbia. He is seeking declaratory relief and an injunction and ruling that “all borrowers identified in the Westwood Group’s application are entitled to full loan discharge” under the Borrower’s Repayment Defense Program.

The group of student borrowers is represented by Student Defence, the Lawyers’ Committee for Civil Rights Under Law (Lawyers’ Committee) and the National Consumer Law Center.

Further Reading on Student Loans

If Biden enacts a broad student loan waiver, it could look like this

40,000 student borrowers will automatically get ‘immediate debt cancellation’ – but questions remain

Want student loan forgiveness? To qualify, borrowers may need to do this first

Who qualifies for student loan relief under Biden’s huge new income-based repayment expansion