Student loan borrowers succeed in legal action against DeVos

A federal judge has previously approved a final settlement agreement between a class of student loan borrowers and the US Department of Education. According to the settlement agreement, the Department would be required to process approximately 170,000 loan cancellation requests that have been stuck, in some cases for years.

The case is Soft against DeVos. Here are the details.

Background

Student loan borrowers had submitted tens of thousands of student loan forgiveness requests provided by the Borrower repayment defense program. The final regulations governing the borrower’s defense program have been created by the Obama administration in 2016. The program is designed to help students who have been defrauded by predatory schools.

However, when DeVos took over the US Department of Education in 2017, his administration rewrote the borrower defense regulations, making it much more difficult for borrowers to obtain relief under the program. Student loan borrowers retaliated with multiple prosecutions.

Legal battles have continued for several years. And in the meantime, around 170,000 student loan cancellation requests have been ignored by the Education Department, citing ongoing legal disputes. Student loan borrowers continued DeVos again, this time to force his administration to deal with these blocked requests.

A spokesperson for the US Department of Education previously said, “Secretary DeVos has not only started processing borrower defense claims following the settlement … Between December 1, 2019 and February 29, 2020, the ministry approved 7,888 borrower defense requests. The Ministry says it has not dealt with any further defense claims from the borrower due to the ongoing litigation over the program.

Settlement Agreement

Under the settlement agreement, the Ministry of Education would have 18 months to process the pending and unprocessed borrower’s defense claims that have been submitted. More:

  • Interest accrued while claims were pending would be forfeited, regardless of the final outcome of a claim.
  • If the department takes more than 18 months to make a decision, affected student borrowers would get 30 percent of their federal student loans paid off for each additional month of delay.
  • If the Department of Education continues to engage in “forced collections” on affected federal student loans (for example through salary garnishments or tax refund foreclosures), borrowers will get 80% of the loan. their canceled loan balances.
  • The Department is required to file quarterly reports on its progress.
  • Borrowers retain the right to challenge any final decision of the Department.

And after?

According to the Predatory Student Loans Project, who represents student borrowers, “The Department of Education must now inform all class members of the proposed settlement and their opportunity to comment or object. After the class members’ weigh-in period is over, the judge will hold a final “fairness hearing” and thereafter, the judge will grant or deny final approval of the settlement. If the judge gives his final approval, the rules will come into full force. “

Further reading

Congress rescinds DeVos loan forgiveness rule – will Trump veto?

Education Ministry reveals illegally seizing salaries of 54,000 borrowers

Student loan borrowers sue Betsy DeVos over illegal salary garnishments

About Aldrich Stanley

Aldrich Stanley

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