Students Are Victims of Fraud, but the Department of Education Won’t Help

From today’s New York Times:

When Albert Paul Cruz opened a letter from the Education Department last month, he saw the words he’d been waiting for: “We approved your claim.” The government finally agreed that he’d been defrauded by ITT Technical Institute, the defunct for-profit chain where he’d racked up almost $60,000 in student loans getting what he considers a worthless degree.

Then he scrolled to the next page and saw how much of that debt would be forgiven: zero. The department, the letter said, had concluded he suffered no financial harm.

“You’re acknowledging the school defrauded its students and claiming that didn’t hurt us?” said Mr. Cruz, who earned an associate degree in computer networking systems in 2010 but never worked in that field. “How is that even possible?”

The approval of claims without financial relief is the latest twist in longstanding efforts by defrauded borrowers to get help from the federal government through a program meant to assist former students whose schools offered sham degrees and empty promises.

Years of delays and attempts to cut the relief borrowers can receive have prompted dozens of lawsuits against the department. Now, under pressure from federal courts to deal with hundreds of thousands of unresolved claims, the Education Department is processing them — and saying no. More than 45,000 rejection notices have been sent in recent months, according to agency data.

And when the department is legally obligated to approve a claim, it is often granting only minuscule relief — or none at all.

“Borrowers can’t win,” said Eileen Connor, the legal director of the Project on Predatory Student Lending, a group that has represented borrowers in multiple cases against the department, including one filed last month that challenges the agency’s partial-relief approach. “To tell even borrowers who can prove they were defrauded by their school that they still get no relief is absurd and cruel.”

Education Secretary Betsy DeVos has long refused to take part in the program, which she once called a “free money” giveaway. Last year, she said the program was a “mess” when she took over, and added that a new methodology for calculating relief — including granting none on many approved claims — “treats students fairly and ensures that taxpayers who did not go to college or who faithfully paid off their student loans do not shoulder student loan costs for those who didn’t suffer harm.”

Read the complete article here.