For-profit colleges: Department of Education freed up colleges for $ 1 billion
In February, nearly 1,300 colleges owed the Department of Education money, according to the National Student Legal Defense Network’s review of a series of documents it obtained over two years thanks to requests from the Freedom of Information Act.
The group, founded by former education ministry officials, says the agency has for years not used all the tools it has to raise money from colleges and their owners while forcing students to continue paying their debt.
“The Department of Education continues to spend time and money opposing struggling student borrowers while doing nothing to collect more than $ 1 billion owed to the government by colleges and businesses to profit, ”said Dan Zibel, vice president and chief counsel of the National Student Legal Defense Network. , who oversaw higher education litigation for the Obama administration.
In a statement to CNN, Education Department press secretary Kelly Leon said the agency was “committed to improving our policies and practices to better hold institutions accountable for their actions and to provide borrowers fair and simplified access to the benefits to which they are entitled. “
The missing billion dollars
There are several reasons why these institutions owe the Ministry of Education money, according to the report. Some are fined for professional misconduct. Others owe money for loan repayments resulting from its closure or for defrauding students.
If a college shuts down or is found to be misleading students with false statements about placement rates, for example, it may be forced to repay the debt in place of the borrower.
The Biden administration recently canceled $ 1.5 billion in loans for borrowers who attended former ITT Tech and thousands of others who were swindled by other for-profit colleges, but President Joe Biden has resisted calls from fellow Democrats to write off additional debt. RELATED: Democrats Urge Biden to Extend Student Loan Pause Until April 2022
The government can go ahead and cancel a borrower’s debt before the school repays the money, but the process slowed down until shutdown under the former Education Secretary, Betsy DeVos, who tried to change the forgiveness rules.
One of the tools available to the Department of Education to collect unpaid school debts is to cut them off from federal funding that allows them to provide student loans and grant grants. Yet, according to the report, nearly 200 of these schools continued to receive federal funds in the 2019-20 school year.
General cancellation of student debt
In the past 15 months, the government has collected nothing from federal student borrowers due to a pandemic relief allowance that is set to expire on October 1. But normally he uses several tactics to collect from borrowers, ranging from salary to tax refund. garnishment to fight against debt discharges in bankruptcy court
Borrowers currently owe the government $ 1.5 trillion in student debt.
Democrats like Senate Majority Leader Chuck Schumer and Massachusetts Senator Elizabeth Warren are calling on Biden to write off $ 50,000 in federal student loan debt per borrower, arguing that the economic crisis caused by the pandemic makes it even more important cancellation of student loan debt as soon as possible.
This week, more than 60 Democrats also called on Biden to extend the pandemic break in student loan payments from October 1 to at least next April.
Biden, who said during the campaign that he would support the cancellation of $ 10,000 per borrower, has repeatedly resisted pressure since taking office, arguing that the government should not cancel the debt of people who are gone to “Harvard, Yale and Penn”.
But the president asked Education Secretary Miguel Cardona to write a note on the executive branch’s legal authorities to write off the debt. It would be an unprecedented decision, but a note attorneys at Harvard Legal Services Center and its Predatory Student Loans Project say the Education Department has the power to do so.
Biden did not include a student debt cancellation provision in his $ 1.8 trillion U.S. plan for families, which calls for making community colleges free and expanding Pell Grants for students to low income.
More progressive members of the Democratic Party have been calling for the cancellation of student debt for years. Warren and Vermont Independent Senator Bernie Sanders presented forgiveness plans when they ran for the Democratic presidential primary.