Illinois Attorney General Kwame Raoul and Illinois Senator Dick Durbin continue to press the U.S. Department of Education to provide loan forgiveness for students who attended now-closed for-profit schools in the State of Illinois.
Raoul announced earlier this past week that nearly 1,000 former Illinois Institute of Art students will have federal student loans discharged. Raoul is among 21 attorneys general who are a part of a coalition lobbying the U.S. Department of Education to provide immediate forgiveness to federal student loans of eligible former ITT Tech students who attended the bankrupt for-profit school when it closed. Raoul along with the coalition sent a letter asking whether the Department of Education had complied with federal law that require it to automatically discharge the loans of qualifying borrowers enrolled at closed schools who do not continue their education elsewhere. Senator Dick Durbin and Democrat Washington Senator Patty Murray provided an update to the coalition on Friday saying the department’s response to comply with the federal regulation was “unacceptable.”
Raoul noted in his letter with the other attorneys that many of the credits earned at the for-profit schools are non-transferable, making it nearly impossible for the nearly 52,000 students defrauded in the situation to continue their education. Raoul and the coalition also said in May, the Department of Education estimated about 52,000 former ITT students are eligible for nearly $833 million in debt relief. However, recent information obtained from Congress indicates that discharges have only been granted to about 7,000 former ITT student borrowers, which only amounts to about $95 million, according to a press release from Raoul’s office.
According to Durbin’s office, the most recent data available says the Department of Eucation has failed to approve nearly 210,000 borrower defense applications for more than a year. Secretary of the Department of Education Betsy DeVos was nearly subpoenaed to Congress this week for failing to provide records from the department this week. DeVos has claimed publicly since 2017 that borrower forgiveness provisions are too lenient. Last month, DeVos was fined in U.S District court in San Francisco for contempt of court after the Department of Education was found to still be collecting on student loans for defunct Corinthian College borrowers after being ordered to cease by the court in May 2018. In June of this year , Raoul and Colorado Attorney General Phil Weiser sent a group discharge application to the Department of Education to discharge federal student loans for students who attended the Illinois Institute of Art and Art Institute of Colorado. They maintained the colleges misrepresented that they were still accredited for six months after losing accreditation. The U.S. Department of Education has since changed the borrower defense provision rules. Under the revised rule, “a school engaging in misrepresentation alone will not be sufficient for a successful claim.” Durbin and Murray are currently working to overturn the revised rule in Congress.
According to Raoul’s office, the department will discharge loans used to pay for periods from January 2018 until ITT Tech campuses closed in December last year. However, Raoul contends that the Department of Education has not said that it will issue refunds for amounts that Illinois Institute of Art students paid on those loans. Raoul also questions the department’s decision to not extend the closed school discharge date beyond June 29, 2018, saying that many defrauded students will be denied the opportunity to discharge their student loans used to pay for periods prior to January 2018. Up until this past Thursday, the Department of Education had refused to turn over documentation about any of the loan forgiveness until Democrat Representative Bobby Scott threatened to subpoena DeVos to the House Education Committee for testimony about the reasoning from her department’s lack of movement on borrower defense and loan forgiveness. Scott is chairman of the committee. DeVos also has recently been under further scrutiny after her chief aide A. Wayne Johnson resigned last month and has called for a major shift in policy on student loan debt. Johnson has likened the federal student loan portfolio to a “bomb” ready to go off. When he stepped down, he publicly announced that he believes there are “fundamental flaws” in the nation’s student loan system that require drastic changes. He has since called for a set amount of debt to be forgiven and has said he wishes to run for Senate in his home state of Georgia.
Presidential candidate Elizabeth Warren and House Majority Whip Jim Clyburn have sent a letter to DeVos’ office requesting Johnson’s resignation letter, department analyses on debt repayment, analyses on loan servicers, reports from the McKinsey consulting firm and reports on inaccurate or unfair credit reporting on student borrowers. A due date for response is set for November 26th.