Scott Statement on Department of Education’s New Formula for Denying Defrauded Borrowers Full Debt Relief

WASHINGTON – Chairman Bobby Scott (VA-03) issued the following statement after the Department of Education released a revised formula for providing partial loan relief to defrauded borrowers under the Borrower Defense rule.   

“Under the Borrower Defense rule, the Department of Education has the clear authority to provide full debt relief to students defrauded by their college. Rather than simply exercising that authority and providing life-changing relief to defrauded borrowers, the Department is inventing another scheme to provide students less relief than the law allows. It should not be controversial that victims of predatory schools deserve meaningful relief. The Department’s continued resistance to making defrauded students whole is mystifying.

“The Department’s reluctance to process Borrower Defense claims is not only forcing students to put their lives on hold, it is also increasing costs for taxpayers. Once a student files a Borrower Defense claim, the federal government is on the hook for much of interest that accrues while they wait for the claim to be processed. The Department’s failure to process any Borrower Defense claims over the past year – which has produced a backlog of more than 200,000 claims – is racking up an interest bill, even on claims that are ultimately denied, that will be paid by taxpayers.

“In short, the Department is shortchanging both defrauded students and American taxpayers.  

“Currently, more than 200,000 student borrowers are waiting on the Department to process their claim for debt relief. Every day the Department fails to provide them full relief will increase the desperation felt by defrauded borrowers and increase the cost borne by American taxpayers.” 


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