This story is developing.
A new lawsuit claims that former U.S. Secretary of Education Betsy DeVos may have rejected your claim for student loan cancellation—in only 12 minutes.
Here’s what you need to know.
According to the New York Times, documents from a federal class action lawsuit against DeVos make some significant claims about student loans and student loan forgiveness during the Trump administration, with allegations including, among others:
- 130,000 claims for student loan forgiveness were denied in DeVos’ final year in office (compared to 9,000 rejections in the preceding five years);
- The Education Department sought to process 5,000 student loan forgiveness claims per week;
- Education Department reviewers often reviewed and reached a decision on an application for student loan cancellation in 12 minutes or less;
- Reviewers who processed claims for student loan forgiveness faster were awarded bonuses, while slower reviewers were fired;
- 91,000 applications for student loan cancellation were rejected with little to no explanation;
- 95% of student loan borrowers who applied for student loan cancellation were rejected;
- Most, if not all, borrowers whose applications were approved got student loan cancellation only because of prior student loan forgiveness rules from the Obama administration.
The lawsuit involves 200,000 student loan borrowers who sought student loan cancellation under borrower defense to repayment, which allows student loan borrowers to get student loan cancellation if they were defrauded by their school or their school closed, for example. The New York Times says it did not reach DeVos for comment on the lawsuit or the allegations.
DeVos opposes student loan forgiveness
It’s no secret that DeVos largely opposed student loan forgiveness for student loan borrowers. During her tenure as Education Secretary, DeVos said she wanted to strike a balance between the needs and interests of both taxpayers and student loan borrowers. DeVos claimed that the borrower defense to repayment rules were too lax and potentially cost taxpayers billions of dollars. For example, DeVos said her student loan forgiveness rules — compared to student loan forgiveness rules from the Obama administration — would save taxpayers $11 billion over 10 years. As part of her plan, DeVos required student loan borrowers who sought to claim borrower defense to apply for student loan cancellation (rather than making it automatic). DeVos also included a three-year statute of limitations on student loan cancellation for borrowers to prove they were harmed financially. Importantly, this student loan cancellation is different than public service loan forgiveness program, a federal program that forgives student loans for borrowers who work for a qualified non-profit or public service employer, which also experienced problems. Under that program, under DeVos’s leadership, as high as 99% of student loan borrowers who applied were rejected for student loan cancellation of their federal student loans.
Biden cancels $1 billion of student loans
President Joe Biden cancelled $1 billion of student loans yesterday. In a major announcement, the Education Department said it will give full student loan cancellation to 72,000 student loan borrowers who only got partial student loan forgiveness during the Trump administration. This is the first of what is expected to be many steps to change student loans in the coming years as the Biden administration increases its commitment to consumer protection for student loan borrowers. Biden’s action on student loan signals a revival of the borrower defense rules of the Obama-era. What’s next for your student loans? Get a student loan game plan. While this student loan cancellation announcement is good news for 72,000 student loan borrowers, there’s no guarantee that your student loans will be cancelled next. Here are some potential options for your student loan repayment: