State Attorney General Maura Healey yesterday fired back at U.S. Secretary of Education Betsy DeVos following a report that the Trump administration may only partially forgive federal loans of students defrauded by for-profit colleges.
The move runs counter to the Obama administration’s policy of erasing that debt. Tens of thousands of students deceived by now-defunct for-profit schools had more than $550 million in such loans canceled under Obama.
“Secretary DeVos and her team want to give predatory schools a free pass to cheat students and taxpayers,” Healey said. “This latest announcement will hurt Massachusetts students and families who are drowning in unfair and unaffordable debt.”
The Education Department may look at average earnings of students in similar programs and schools to determine how much debt to wipe away, according to department officials, who spoke to The Associated Press on condition of anonymity because they weren’t authorized to publicly comment on the issue.
In August, the department extended its contract with a staffing agency to speed up processing of a backlog of loan forgiveness claims. In the procurement notice, it said “policy changes may necessitate certain claims already processed be revisited to assess other attributes.”
DeVos’ review prompted an outcry from student loan advocates, who said the idea of giving defrauded students only partial loan relief was unjustified and unfair because many classmates had already gotten full loan cancellation.
Critics say the Trump administration, which has ties to the for-profit sector, is looking out for industry interests. Earlier this year, Trump paid $25 million to settle charges his Trump University misled students.
“Anything other than full cancellation is not a valid outcome,” said Eileen Connor, litigation director at Harvard University’s Project on Predatory Student Lending, which has represented hundreds of defrauded students of the now-closed Corinthian Colleges, a national for-profit chain that had Brighton and Chelsea campuses.
“The nature of the wrong that was done to them — the harm — is even bigger than the loans that they have,” Connor said.
The project in July filed a federal lawsuit against DeVos and her department on behalf of Meaghan Bauer of Peabody and Stephano Del Rose of Canton. The federal student loan borrowers attended the for-profit New England Institute of Art in Brookline to study digital filmmaking and video production, and allege it misrepresented its quality of instruction, job placement assistance, job prospects for graduates and its costs in comparison to graduates’ low-paying employment, court documents state.
Their lawsuit claims the department’s delay of an Obama administration change to the federal “borrower defense” regulation that was to take effect July 1 is illegal. Healey led a 19-state coalition in filing a similar suit.
The regulation allows students at for-profit colleges and other vocational programs to have their loans forgiven if it’s determined they were defrauded. It was updated to shift more financial responsibility onto schools and prevent them from having students sign away the right to sue, but DeVos froze the change, arguing it was too broad and could cancel the loans of some students without a sound basis.
DeVos has faced criticism for delaying consideration of 65,000-plus applications for loan forgiveness. Not a single claim has been approved since she took office in February.
Herald wire services were used in this report.
