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Betsy DeVos is canceling 15,000 students' debt after trying to avoid it for a year​

In total, they have $150 million in student loan debt.

by Emma Ockerman
Dec 14 2018, 4:22pm

Despite Betsy DeVos’ best efforts, the U.S. Department of Education will cancel the nearly $150 million in student loan debt for 15,000 people whose schools shut down in the middle of their education or defrauded them.

For more than a year, DeVos tried to overhaul or delay the Obama-era “borrower defense” regulations, which intended to automatically cancel loan debt for students who for-profit institutions clearly defrauded. DeVos called the rules “free money” and insisted the Department of Education needed stricter standards for loan forgiveness.

In 2017, however, 19 states and the District of Columbia sued the Department of Education for neglecting to do its job, and a judge ruled in October that the rule had to be implemented right away.

On Friday, the Department of Education finally sent emails to the 15,000 students informing them that they’d received a “closed school” loan discharge, which cancels their debt.

More than half of the 15,000 — carrying $80 million of the debt — were former students of Corinthian Colleges’ programs, according to Politico. Corinthian Colleges suddenly went under in 2015 and left nearly 80,000 students with debt. Before the for-profit institution folded, the Department of Education fined them $30 million for misleading students about their job prospects after college, which left thousands of students saddled with debt they couldn’t possibly repay for programs primarily based in certificates and associate degrees.

DeVos has been criticized for a perceived cozy relationship with for-profit colleges. For example, she reinstated the Accrediting Council for Independent Colleges and Schools, the accrediting agency of for-profit colleges. The Obama administration stripped that panel of its authority in 2016 for accrediting schools like Corinthian and not doing its part to protect students from fraud.

DeVos also proposed slashing the gainful employment rule, which kicked colleges out of federal student loan programs if their students rarely earned enough money to pay those loans back after graduation. The Department of Education, however, missed its deadline to finalize that regulation.

For-profit colleges criticized the Obama-era rules for targeting their industry with stipulations that don’t apply to other, nonprofit colleges.

Cover image: Betsy DeVos, U.S. secretary of education, speaks during a meeting in the Cabinet Room of the White House in Washington, D.C., U.S., on Wednesday, July 18, 2018. (Olivier Douliery/Pool via Bloomberg)