How the Arbitrary Borrower Defense Process Failed These Student Borrowers | Blog

February 24, 2022

It’s no secret that the Department of Education has repeatedly let defrauded student borrowers down. Over the course of multiple administrations and several years, the Department has sat on borrower defense applications, issued mass denials, and refused to cancel the debt of all those who are owed relief, time and time again.

And while some student borrowers have been lucky enough to get their loans discharged through the borrower defense process, hundreds of thousands more are equally owed justice. Part of the problem is the arbitrary process the Department of Education has used to determine who gets relief and who doesn’t.

Take Jen and Debi – two borrowers with almost identical stories who both applied for borrower defense, but only one got her loans cancelled.

Both Jen and Debi attended Everest University, a for-profit college owned by the now defunct Corinthian Colleges. Prior to Corinthian shutting down in 2015, the company faced dozens of ongoing lawsuits and government investigations into its widespread predatory practices. In 2016, a California court levied a $1.1 billion judgment against the shuttered company for its practices.

An investigation by the Department of Education itself determined that Corinthian Colleges students were misled and deceived by their schools. These findings, combined with the numerous other government investigations and court rulings, make Corinthian borrowers eligible for loan cancellation through borrower defense.

In the case of Jen and Debi, both submitted borrower defense applications, yet only Jen received a loan discharge. There is no clear reason why Debi did not receive one — both attended Everest during the same period of time and studied in the same degree program.

The law is clear: both Jen and Debi are entitled to have their loans discharged.

Sadly, this situation is not unique. The Department has granted loan cancellation to some borrowers in certain programs at select schools, yet continues to leave hundreds of thousands of applications denied or still waiting. Many borrowers are left in a suspended state of limbo, wondering if they’ll be one of the lucky few to get their loans cancelled.

Let’s look at the numbers. As of September 2021, the most recent data available:

There were over 260,000 unresolved borrower defense applications pending before the Department of Education.

  • The Department reported 87,747 pending borrower defense applications.
  • The Department data also listed 45,782 applications as “adjudicated, pending notification.” It is unclear what these decisions are or why notice has not been sent.
  • There are approximately 128,000 applications that were denied using former Secretary DeVos’ unlawful form denial letters. These should all be treated as pending because the manner of adjudication and the form of notification for these applications did not meet the minimum standards of due process
  • Recently, the Department announced a limited set of borrower defense grants, accounting for approximately 6% of the total unresolved applications as of last September. Meanwhile, more applications roll in every day, and the Department has not announced any timetable for resolving either new or backlogged applications—regardless of how long a borrower has been waiting.

Where there is widespread fraud and abuse, the Department needs to do what is right and cancel the loans of defrauded borrowers. Not just for some, but for all that have spent years waiting for justice.