Betsy DeVos to cancel $150M in student loan debt after losing court battle

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Betsy DeVos: We have a crisis around student debt

Education Secretary Betsy DeVos on concerns over the potential economic impact of mounting student loan debt.

The U.S. Department of Education will cancel $150 million in student loans after a judge dismissed Education Secretary Betsy DeVos’ bid to block an Obama-era rule on the matter.

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The debt forgiveness applies to about 15,000 student borrowers who were eligible for “closed school” loan discharges. Roughly half of the canceled debt belongs to students who attended Corinthian Colleges, a chain of for-profit schools that shuttered in April 2015, with the remaining debt tied to students who attended schools that closed from 2013 to 2018.

“On Friday, Dec. 14, 2018, we will begin emailing borrowers to inform them that the company that handles billing and other services related to their federal student loans will discharge some or all of the borrower’s loans within the next 30–90 days,” the department said in a press release.

DeVos had sought to block efforts to cancel debts for students who attended schools that closed or the Corinthian Colleges, which were accused of providing inflated job placement statistics to lure attendees. A group of 18 states and Washington, D.C., successfully challenged DeVos’ effort, and a judge ordered the loan discharges to proceed last September.

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DeVos had argued that the Obama-era mandate made it too easy for students to escape their debt, at the expense of colleges and taxpayers, Politico reported.

Federal officials fined Corinthian Colleges $30 million over the misleading statistics in April 2015. The for-profit chain closed shortly thereafter.

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