Panel Event Shows One Thing is Clear: We Must Deliver on Debt Relief for Defrauded Borrowers | Blog

December 18, 2020

Last week, the Project on Predatory Student Lending participated in an event with the Student Borrower Protection Center and Demos dedicated to the findings of a new report, Delivering on Debt Relief: Proposals, Ideas, and Actions to Cancel Student Debt on Day One and Beyond.

 

The event consisted of three panels all about different forms of debt cancelation and kicked off with a keynote address by Senator Elizabeth Warren, who emphasized the government’s “responsibility and moral obligation to act” on the student debt crisis, especially during the pandemic:

 

“Cancelling student debt is the single-most effective executive action available to provide massive consumer-driven stimulus to our economy, which is still hurting because of this pandemic,” Senator Warren said.

 

Legal Director of the Project on Predatory Student Lending, Eileen Connor, participated in a panel discussion about the report and also co-authored the portion of the report on borrower defense with Project on Predatory Student Lending Director Toby Merrill. In the paper, they outline not only what borrower defense is and how it’s supposed to help students, but also how the current administration has failed to use this tool as it should.

 

“Borrower defense is supposed to be a fail safe for borrowers. They shouldn’t have to repay loans when they were cheated,” she said. “How has it been working [under DeVos]? It hasn’t been working at all. Only students from 3 institutions have seen any kind of relief,” Eileen explained. It’s not okay for the Department to act like they don’t have a role to play.”

 

When asked about ways the incoming administration can take action to help protect student borrowers going forward, panelists offered their own pieces of advice.

 

From the Student Borrower Protection Center, Tariq Habah suggested the restoration of the Gainful Employment Rule and its expansion. “We should be closing the loopholes that let schools evade certain rules and lets them bring in student loans they don’t have the right to,” he said.

 

Clinical students from the Project on Predatory Student Lending, Rye Salerno and Erik Manukyan, also touched on this issue in a section of the report that they co-authored about debt cancellation for students with a disqualifying status – which is when students are given loans they aren’t qualified for due to not meeting certain requirements (such as physical or mental condition, age, criminal record).

 

Yan Cao of The Century Foundation offered a long term plan for establishing a “virtuous cycle” for debt cancellation, which she calls the “3 Cs”: CANCEL the debt, CUT OFF bad actors, CLAW BACK wealth.

 

“The basis for borrower defense is that the school is doing something unlawful and shouldn’t be able to get federal funding anymore and that’s not been enforced, which in turn, isn’t letting us cut them off,” Cao said. “If the school isn’t delivering the goods, why should they get paid?”

 

Robyn Smith from the National Consumer Law Center says we need to change the way we view the system. “Instead of putting it on the borrower to prove that they didn’t gain anything [from their for-profit education], the government needs to wipe out the debt the minute they find out a school defrauds their students. Assuming borrowers are at fault isn’t fair because they didn’t do anything wrong.”

 

One major consensus was that students who have been defrauded by a predatory for-profit institution deserve full student loan relief.  

 

“This is something that everyone from the spectrum on student debt cancelation agrees on. This is the issue that is the lowest bar, and everyone agrees, that no matter what the number is, we should not be collecting the debts of borrowers who have been ripped off by predatory schools,” Tariq Habah from the Student Borrower Protection Center said:

 

“The thing that people agree on is that certainly people who have been ripped off should not be held to their loans, and this hasn’t happened. It’s been clear as day that they’ve been ripped off and nothing has been done,” said Eileen Connor.

 

If you missed the event and would like to watch any of the panels, visit the event page on the Student Borrower Protection Center’s site

 

You can also read Eileen’s section of the report on borrower defense here.

And check out the paper by the Project’s clinical students on borrowers with a disqualifying status, here.