Friday, 14 September 2018 19:42

DeVos’ Tiered Relief for Defrauded Students

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The Arkansas Democrat Gazette recently reported that President Trump's administration is granting only partial loan forgiveness to most students approved for help because of fraud by for-profit colleges.

The new administration has adopted a different approach to student loan forgiveness for students defrauded by for-profit colleges. President Trump’s Education Secretary, Betsy DeVos, has rolled out a new policy of “Tiered Relief” in which defrauded students are compensated based on their earnings following completion of college programs.

Utilizing preliminary U.S. Department of Education data, collected over the summer in preparation for the Department’s required report to Congress, The Associated Press has demonstrated that these partial-forgiveness awards have averaged about 30 percent of a student’s outstanding loan with only 1,000 out of 16,000 fraud claims approved by the Education Department receiving full forgiveness.

The Education Department data also shows that more than 9,000 loan-forgiveness claims have been denied under DeVos’ new partial-relief program. This is in stark contrast to the Department’s loan-forgiveness programs under the Obama administration which didn’t issue any denials. Of the total number of claims approved under both the Obama and Trump administrations, 31 percent were granted partial relief, however, the claims approved by the Obama administration didn’t include any partial loan forgiveness.

When DeVos’ rolled out the partial-relief program last December, her stance was that “no fraud is acceptable, and students deserve relief if the school they attended acted dishonestly.” She said the new process “will allow claims to be adjudicated quickly” as well as “protect taxpayers from being forced to shoulder massive costs that may be unjustified.” Preston Cooper, an analyst with the conservative American Enterprise Institute, said the tiered system reflected DeVos' attempt to strike a balance between protecting the interests of students and those of taxpayers.

Many people are critical of the new approach taken by DeVos. Her tiered relief policy, based on how students fared financially after graduating or participating in a program, has been challenged in federal court. In June a judge ordered the department to halt partial relief for students, ruling that the calculation method was unacceptable. Additionally, her apparent attempt to weaken or scrap Obama-era regulations, established to police for-profit colleges and help defrauded students get their loans forgiven, is seen by many as an attempt to protect the for-profit colleges. Clare McCann, a higher-education expert with the New America, a Washington-based think tank said, "it's very self-evident in the policies that they are proposing and implementing that they are there to look out for the for-profit colleges."


Anyone with student loans, that has been defrauded by for-profit schools, needs to pay close attention to the new administration’s approach to student loan relief. This is an evolving issue, which under DeVos’ leadership, is leaning towards a balance between protecting the interests of students and those of taxpayers. If you’re wondering how these developments will affect your student loan status, call Bankruptcy and Student Loan Lawyers Chris Bush and DJ Rausa at (619) 295-3322 to schedule a free initial consultation.

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Read 166 times Last modified on Monday, 17 December 2018 20:54
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