Senator Durbin proposes debt forgiveness for borrowers defrauded by ITT Tech and Corinthian

Democratic Senate Whip Dick Durbin (D-IL) and other Democratic lawmakers have unveiled a plan to fully forgive debt for defrauded student borrowers in the upcoming coronavirus relief package. Durbin’s program would specifically target debt relief for students who attended the now defunct ITT Tech and Corinthian College.

the Coronavirus Emergency Borrower Defense Act (E-BD) of Durbin would relieve three categories of borrowers. The first two are students who attended ITT Tech and Corinthian. These schools closed after fraud was uncovered during investigations by the Department of Education and state attorneys general.

The other category covers borrowers in group release applications made by state attorneys general. These requests typically follow investigations by their respective state attorneys general and are sent on behalf of a group of borrowers affected by the cases that triggered the investigations.

the Higher Education Act empowers the Secretary of Education to discharge the debt of schools that have defrauded students as part of the Borrower’s Defense to Refund Provision, also known as the Loan Defense Rule ‘borrower. Controversy and partisan politics have surrounded this rule, particularly the 2016 Obama Administration Settlement.

Education Secretary Betsy DeVos recently drafted a new version of the regulations that would make it harder for many students to get relief by creating a much higher burden of proof for borrowers. Critics said his rule would make it nearly impossible for borrowers to prove schools defrauded them. This standard was considered so unreasonable that both houses of Congress chastised DeVos and voted to overturn the rule under the Congressional Review Act, an initiative led by Durbin in the Senate.

DeVos also created a formula for the old rule that would make it harder for borrowers to receive full relief, offering partial forgiveness instead. Based on the projected income of the program they were participating in, student borrowers would receive a rebate based on the difference between their income and this amount. Experts quickly pointed out several flaws in the formula, calling the methodology “totally inappropriate” and saying that it “confuses many statistical concepts that are not intended to be used together”.

It’s been five years since ITT closed and nearly four years since Corinthian closed and thousands of borrowers have yet to see relief. Durbin’s proposal would provide full relief to those borrowers, including those who have already received partial relief. The plan would require a full discharge within 30 days of its enactment.

Durbin is joined by Congressman Mark Takano (D-CA), Senator Sherrod Brown (D-OH), Congresswoman Pramila Jayapal (D-WA-07) and Senator Elizabeth Warren (D-MA). “Borrowers covered by this proposal were defrauded, based on the findings of the Department of Education itself and evidence from state attorneys general,” Durbin said in a statement.

Congressman Takano, a longtime critic of for-profit colleges, said, “The longer these borrowers wait for help, the more emotional and financial hardship they will have to endure. This pandemic must compel Congress to find ways to help alleviate the suffering these families and workers face. »

Senate Democrats proposed that the Ministry of Education pay loans to all student borrowers during the coronavirus crisis and provide a minimum of $10,000 in student loan forgiveness. Ancient Vice President Joe Bidenthe presumptive Democratic presidential nominee, endorsed this plan. Progressives in the House offered to provide $30,000 in student loan forgiveness during the pandemic. Other House Democrats recently called for a write-off of $20,000 in debt due to the crisis.

As Congress considers more coronavirus relief, student debt will likely continue to be part of the conversation. Although these students’ debt is not specific to the pandemic, they have struggled to find jobs and pay off their debts and the crisis will likely only add to their difficulties.

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