Borrowers who say they were misled by their colleges have waited years for their claims to be reviewed. Wednesday, a judge granted final approval to a settlement that could cancel at least $6 billion in federal student loans for 200,000 borrowers.
Tens of thousands of borrowers who say they were ripped off have been in limbo, waiting years to have their claims reviewed. During the Trump administration, borrower advocates sued the department, arguing it deliberately and illegally stopped processing claims and wrongfully denied others without considering the merits of their cases.
to grant final approval of the settlement, Alsup calls the program's backlog"an impossible quagmire... As of now, approximately 443,000 borrowers have pending borrower-defense applications. That is a staggering number. If, hypothetically, the Department's Borrower Defense Unit had all 33 of its claim adjudicators working 40 hours a week, 52 weeks a year , with each claim adjudicator processing two claims per day, it would take the DepartmentThe settlement was opposed by the for-profit college industry, with advocates arguing that most of the schools on the settlement's list have never been investigated, let alone found to have defrauded students. The settlement says these schools were included because of strong signs they had committed"substantial misconduct ... whether credibly alleged or in some instances proven." In an earlier legal memo protesting the settlement, attorneys for Everglades College, Inc., whose schools are listed among the 153, called it a"farce" and complained that,"in most instances, all the Department has before it are unproven and yet-to-be-adjudicated allegations, but the agency is nonetheless deeming schools guilty without further process or explanation." Alsup dismissed those concerns, writing that a school's inclusion in the settlement is not a kind of scarlet letter because"the settlement does not constitute a successful or approved borrower-defense claim." As a result, he writes,"nothing in this settlement will cause any school to lose a dime." In a statement response, Jason Altmire, the president and CEO of Career Education Colleges and Universities , which represents many of the 153 schools on the settlement list, said his group is"disappointed" with the decision:"We expect that the Ninth Circuit on appeal will recognize these fatal flaws and send the parties back to the negotiating table." In addition to the approximately 200,000 borrowers who will have their debts erased if this settlement survives appeal, another 64,000 who did not attend one of the 153 listed schools will have their fraud claims reconsidered on the merits.
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