Former Secretary of Education Betsy DeVos did not hide her disdain for a program designed to forgive federal student loans that were stolen by schools that defrauded their students. She called it a “free money” gift, let hundreds of thousands of claims languish for years and reduced the amount of compensation awarded to some successful candidates to $ 0.
Then, after class action made it impossible to stop longer, his agency built what amounted to a rejection assembly line.
In Ms. DeVos’ last year in office, her agency denied nearly 130,000 complaints – far exceeding 9,000 rejections in the previous five years – with a system that pressed workers to streamline requests in minutes, according to internal documents from the Department of Education filed in federal court.
The department aimed to process 5,000 applications a week, the documents show – a standard that required agency officials to judge claims that could span hundreds of pages in less than 12 minutes. Those who did this the fastest were eligible for bonuses; whoever took longer runs the risk of being fired. Agency officials rejected claims against hundreds of schools for failing to include written evidence that borrowers were never required to submit. And the department often disregarded its own findings of wrongdoing by schools when reviewing its students’ allegations.
“Most requests will be denied,” wrote Colleen Nevin, a career department official who led the complaints handling unit, in a 2019 memo. Her group evaluated cases involving 1,400 schools, she wrote, and approved claims involving only three . All approvals were based on criteria established prior to Ms. DeVos’ inauguration.
The documents were obtained through a court order by lawyers in the case of a class action lawsuit, which involves more than 200,000 people who filed lawsuits under a relief program known as the borrower’s defense of repayment. The program allows borrowers who have been substantially deceived by their schools to have their federal student loans forgiven. Before little used, the system was inundated with demands during the Obama administration, after a government crackdown brought down a series of large, for-profit networks.
Most of these complaints still persisted when President Donald J. Trump took office, and the lawsuit, opened in 2019 in the federal court in San Francisco, sought to compel the department to review complaints that had languished for up to four years. In an agreement signed last year, the department agreed to speed things up and make decisions.
In seven months, the department rejected 91,000 requests – a barrage of denials that the borrower’s lawyers described as “almost useless pieces of paper that do not explain their decisions”.
Nearly 95 percent of borrowers in the case whose claims were decided were rejected, according to court records. Most – if not all – of the claims that were approved involved applications that the agency was forced to grant because of precedents set before Ms. DeVos took office.
After the borrowers’ lawyers complained, Judge William Alsup rejected the deal in October. His decision strongly criticized the department for “issuing superficial denial notices entirely without meaningful explanation at a breakneck pace,” and he ordered the department to hand over the records – a rare step in lawsuits involving decisions by federal agencies.
The Department of Education declined to comment on the newly submitted documents. Ms. Nevin, who still leads the borrower’s defense team, did not respond to a request for comment. A message left for a representative of Ms. DeVos was not returned.
The department’s lawyers said in a previous lawsuit that the agency’s effort to quickly clear its backlog “largely means focusing on claims that can be denied based on a lack of relevant evidence.”
DeVos’ successor, Miguel Cardona, took office this month and, on Thursday, began to dismantle the department’s approach to claims of fraudulent borrowers. Cardona ended and retroactively reversed DeVos’ policy of granting partial relief, instructing the agency to forgive $ 1 billion in debt from 72,000 people with successful claims – all based on foundations established during the Obama administration.
“Borrowers deserve a simplified and fair way to get relief when they are hurt by their institution’s misconduct,” said Cardona.
But that action did nothing to help people like Theresa Sweet, the main plaintiff in the class action lawsuit, whose request for forgiveness was denied last year after a four-year wait. She graduated in 2006 from the Brooks Institute of Photography, a for-profit school that closed a decade later, after her credentialer accused her of “deliberately deceiving” potential students.
Mrs. Sweet, who hoped to become a professional photographer, borrowed more than $ 100,000 to cover the school’s high tuition fees. Brooks told prospective students that their graduates were in high demand and that their career advisers would help them get jobs. In reality, it offered nothing more than summaries of posts on Craigslist for unpaid internships and concert jobs, she said.
Judge Alsup’s decision in October – who called the department’s trial process “disturbingly Kafkaesque” – was a balm, she said.
“When the judge said the students had been harmed, I thought someone was finally coming and saying that,” said Sweet. “I literally lost track of the number of people who came to me and told me they were thinking about suicide because their debts have had a very negative impact on their lives.”
The agency’s recently released documents describe the rejection of tens of thousands of distress calls, even when the department itself concluded that schools had committed irregularities.
More than 200 alumni have accused Empire Beauty School, a franchised chain that trains hairdressers and makeup artists. Several borrowers claimed that their school had made loans in their name, without their knowledge.
The Department of Education’s inspection unit itself punished four Empire admission officers for falsifying or falsifying student loan documents. Three were criminally convicted of fraud for their actions.
But that did not mean a “standard” of misconduct, the department decided. He rejected all borrowers’ requests for help. (Borrowers’ allegations “have not been submitted to the Empire for a response,” a school official told The New York Times, adding that the Empire “discovered the activity and self-reported the individuals involved.”)
The Phoenix campus of Carrington College, which manages occupational programs such as dental and nursing training, has repeatedly misrepresented the careers of its graduates, found an investigation by the Department of Education. Almost a quarter of the school’s job claims that were examined by the department between 2012 and 2014 were false. The college did not respond to a request for comment.
But when more than 300 Carrington alumni filed lawsuits saying they had been duped about their job prospects, the department denied the claims. The reviewer wrote that the borrowers did not provide evidence and that the agency “is not otherwise in possession of evidence to establish a standard or practice for this type of misconduct”.
The reviewers were under significant pressure to process claims quickly, the new documents show. To clear its backlog, the agency hired dozens of employees and contract lawyers. The assigned goal was to review at least five cases per hour. Whoever did more could earn extra money and time off. Those who did less were placed under “intensified monitoring” by their managers and subject to corrective actions, including dismissal.
Officially, that system remains in place, said Eileen Connor, director of litigation for the Harvard Law School Project on Predatory Student Loan, which represents borrowers in the case of class action. Candidates will have no hope of prevailing until the department dismantles its assembly line approach and gives applications the consideration they deserve, she said.
“There was all this infrastructure set up to process claims without actually contending with them,” said Connor.