Betsy DeVos announces new loan forgiveness plan for eligible students

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Photo Credit: Courtesy of Michael Vadon | Daily Texan Staff

United States Secretary of Education Betsy DeVos recently announced a new loan forgiveness policy, increasing the rules for filing a loan forgiveness claim.

In order to approve a loan forgiveness claim, the new policy says students now must prove their school defrauded them by misrepresenting some fact about the university that caused the student to enroll and led to financial harm. The policy also gives students a three year limit past graduation or withdrawal to file a claim for cancellation.

Eligible students can currently file for loan relief under an Obama administration rule, which granted automatic loan forgiveness to some students. When the new policy goes into affect July 1, 2020, the department will consider each case individually instead of granting automatic relief.

The Obama administration began allowing students to seek cancellation of their federal student loans if they were defrauded by their college in 2016. When the policy was first proposed, DeVos tried to block it and delayed it until 2017. According to the U.S. World and News Report, there are currently more than 150,000 borrower defense claims pending. 

According to the U.S. Department of Education, these changes will save taxpayers $11.1 billion from 2020 to 2029. The new policy will allow the federal government to recover student loan dollars from schools accused of defrauding their students, according to the statement. 

“I called for this regulatory reset more than two years ago, as it became clear the old rules just weren’t working,” DeVos said in the statement. “We believe the final rule corrects the wrongs of the 2016 ruling through common sense and carefully crafted reforms that hold colleges and universities accountable and treat students and taxpayers fairly.”

In a 2016 statement announcing her intention to rewrite the old policy, DeVos said the loan forgiveness rules under the Obama administration were too lenient. Though the old policy offered full loan forgiveness, Devos said she favored partial loan forgiveness. 

Student advocacy groups sued the Trump administration shortly after the release of the 2016 statement when the administration stopped processing cancellation claims, according to the U.S. News & World Report. 

Wil Del Pilar, vice president of higher education policy and practice at student advocacy group The Education Trust, said the department’s final rule damages the ability of any defrauded or misled borrower to get their federal loans discharged.

“Instead of creating a fairer and more streamlined process for students to get loan relief they deserve, the (U.S. Department of Education) has created several insurmountable barriers for borrowers to overcome to assert their right to relief,” Del Pilar said in a statement.

UT alumna Maria Rodriguez said DeVos has made it increasingly difficult for students who are in need to get necessary loan forgiveness.

“Being a first generation student from a household where the primary language is not English, I feel very lucky that I was able to navigate covering the cost of school without feeling misled,” Rodriguez said. “I never felt like I misunderstood the financial burden of getting a higher education. However, I know that all students are not as fortunate as myself.”