DeVos Toughens Rules for Student Borrowers Bilked by Colleges

DeVos Toughens Rules for Student Borrowers Bilked by Colleges

But when Ms. DeVos took over, the process stalled. The department had nearly 180,000 pending claims as of March 30, and had not approved or denied any in more than a year. Those cases must still be evaluated under the rules in place when the loans were made.

Many of the claims relate to false promises by for-profit schools about their graduates’ career prospects. In a coordinated crackdown, state attorneys general and Obama-era federal regulators brought a series of lawsuits against schools that saddled students with high debts for subpar educations. Several large chains, including Corinthian and ITT Educational Services, went under.

The Obama administration granted full loan discharges to the borrower defense claims that it approved, but Ms. DeVos tried a new tactic, discharging only a portion of the debt owed by some Corinthian students. A federal judge in California blocked that approach last year, ruling that the department had violated privacy laws by improperly obtaining information from the Social Security Administration on individual applicants’ earnings. The department appealed the decision and is waiting for a court ruling before it addresses those borrowers’ claims, Ms. Jones said.

“We are diligently working to see if there is a different methodology we could employ so we can resolve those claims,” she said.

Some people, like Jessica Jacobson, have been waiting for more than four years for a decision on their claim. In June, she and six others asked the federal court in the Northern District of California to compel the Education Department to make decisions on their cases.

Ms. Jacobson earned a bachelor’s degree from the New England Institute of Art, which she hoped would lead to a career in visual effects. She picked the school, she said, because it marketed its industry connections and state-of-the-art technology. But the equipment was scarce and obsolete, she said, and the school’s career support was limited to pointing students toward public job postings and giving them handouts like one titled “Tips for Applying to a Job From Craigslist.”

After her graduation, Ms. Jacobson worked a succession of low-wage retail and restaurant jobs. The New England Institute of Art closed in 2017. The Massachusetts attorney general sued its former operators last year, accusing the school of predatory recruiting tactics and of deceiving students by misrepresenting its job placement rates.

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