Warren blasts DeVos on reducing loan forgiveness

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The U.S. Department of Education on Wednesday announced new guidelines on loan relief for students who were defrauded by Corinthian Colleges, Inc.

Education Secretary Betsy DeVos said in statement that the new process is faster and protects taxpayers from shouldering the costs.

The basis for ruling whether any discharge is appropriate, however, will remain the same - such as for misleading claims involving job placement rates, job guarantees or transfer of student credit. If their remuneration is at or above the margin, the department will offer reassurance on a sliding scale.

The DOE said students who now earn less than half the income of their peers from a "passing gainful employment program" will get full relief.

Beccera added that, prior to DeVos' appointment by President Donald Trump, some 23,000 former Corinthian students had been granted relief, and their circumstances were identical to the claims that are now on hold. This enhanced procedure will permit assertions to be arbitrated speedily and mistreated students to be considered justly.

"It creates obvious inequities between students who were subject to the same illegal conduct based entirely on when the Education Department made a decision to approve their claims", Shafroth said. For example, Corinthian students who were pursuing a paralegal degree will be compared to students from paralegal programs at other schools.

"It seems like they just couldn't wait to stop providing relief to students", she said. As recently as December 9, a report issued by the DOE's own inspector general called on the office of Federal Student Aid to get moving on thousands of stalled applications. The department would use median or average earnings to make that determination - whichever is more generous to the individual applicant.

To do so, the department will compare average earnings of students in similar programs.

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Student advocates were quick to criticize the shift in policy.

States from California to MA have sued DeVos and the DOE for not discharging the loans of defrauded students. "A student lured into enrolling in and borrowing for a worthless program might see minimal to no relief if they were paying their bills by working in a completely unrelated job, earning minimum wage". They also say struggling borrowers need to know soon if they will not receive relief so that they do not face debt collection and other penalties.

Clare McCann, the deputy director of higher education policy at New America and a former Obama Education Department official, said the announcement leaves unanswered a lot of questions about how exactly the formula for partial relief will work.

Connor said her organization will challenge the decision with lawsuits.

"This appears to have been an unnecessary delay to come up with a process that's confusing to borrowers and leaves everyone not knowing where they stand right now", she said.

Still, some critics said it looked like the department was jumping the gun while there's a formal review process of the rule underway.

For-profit higher education provider Corinthian collapsed in 2015 amid government investigations into how many of its graduates found gainful employment.

Future loan discharges will follow a tiered system based on income, the department also said on Wednesday.

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