Brown, Durbin, Murray, Blumenthal, Warren Continue to Push DeVos to Provide Debt Relief to Defrauded Student Borrowers



October 29, 2020 – WASHINGTON – U.S. Senators Sherrod Brown (D-OH), Dick Durbin (D-IL), Patty Murray (D-WA), Richard Blumenthal (D-CT), and Elizabeth Warren (D-MA) urged the U.S. Department of Education (ED) to provide borrower defense relief for students who attended a number of institutions that ED cut off from Title IV participation as a result of fraud or other consumer misconduct.  In addition, the senators urged Secretary of Education Betsy DeVos to use her authority to extend the closed school discharge look-back window in several cases.

A recent report by the National Student Legal Defense Network (Student Defense) highlights a number of cases in which ED has taken administrative action against an institution for misrepresentations to students and other consumer fraud—in many cases cutting the institution off from Title IV funding.  Specifically, the report identified Computer Systems Institute (CSI), Globe University and the Minnesota School of Business, Marinello School of Beauty, Medtech College, and Charlotte School of Law.

Despite taking action against these institutions based on its own findings of misconduct or the findings of another state or federal entity, ED has failed to provide the relief to which the victims of this misconduct are entitled under the borrower defense provision of the Higher Education Act.  While ED took the appropriate action to protect against further student harm by eliminating these institutions from the Title IV program, it has not used its authority to remedy the harm already done by these institutions to thousands of students.

“While ED refuses to use its own findings of misconduct against these institutions to provide relief to borrowers, findings of misconduct by State attorneys general providing the basis for borrower defense relief for students who attended these and many other institutions have gone without review or decision by you.   At the same time, ED continues to deny borrower defense claims from borrowers who attended these institutions.   This is unconscionable, but not an accident,” the senators wrote. “We urge you to use the evidence and findings in ED’s possession as the basis for long-overdue borrower defense findings and provide immediate relief to eligible borrowers.”

In May, Brown, Durbin, and Warren, along with U.S. Reps. Mark Takano (D-CA-41) and Rep. Pramila Jayapal (D-WA-07), announced a plan that will grant full student loan discharges to three specific emergency categories of defrauded student borrowers. The plan would require eligible loans to be discharged within 30 days of enactment and provides timelines for the Department of Education to take other steps—such as correcting borrowers’ credit reporting.

Full text of the letter is available here and below:

 

October 28, 2020

Dear Secretary DeVos:

We write today to urge you to provide borrower defense relief for students who attended a number of institutions that the Department of Education (ED) cut off from Title IV participation as a result of fraud or other consumer misconduct.  In addition, we urge you to use your authority to extend the closed school discharge look-back window in several cases.

Borrower Defense

A recent report by the National Student Legal Defense Network (Student Defense) highlights a number of cases in which ED has taken administrative action against an institution for misrepresentations to students and other consumer fraud—in many cases cutting the institution off from Title IV funding.  Specifically, the report identified Computer Systems Institute (CSI), Globe University and the Minnesota School of Business, Marinello School of Beauty, Medtech College, and Charlotte School of Law.

Despite taking action against these institutions based on its own findings of misconduct or the findings of another state or federal entity, ED has failed to provide the relief to which the victims of this misconduct are entitled under the borrower defense provision of the Higher Education Act. While ED took the appropriate action to protect against further student harm by eliminating these institutions from the Title IV program, it has not used its authority to remedy the harm already done by these institutions to thousands of students.

Many of us have called on ED to take similar action related to Westwood, Vatterott Colleges, Charlotte School of Law, schools owned by Dream Center, CSI, and Education Corporation of America.   Years later, it appears that ED has not made a single borrower defense finding, or granted a single borrower defense claim, from borrowers attending CSI or any other of these institutions.

While ED refuses to use its own findings of misconduct against these institutions to provide relief to borrowers, findings of misconduct by State attorneys general providing the basis for borrower defense relief for students who attended these and many other institutions have gone without review or decision by you.   At the same time, ED continues to deny borrower defense claims from borrowers who attended these institutions.   This is unconscionable, but not an accident.  Upon taking office, you began dismantling the Federal Student Aid Enforcement Unit (“Enforcement Unit”), which was created in part to integrate borrower defense into the Department’s administrative review process.

We urge you to use the evidence and findings in ED’s possession as the basis for long-overdue borrower defense findings and provide immediate relief to eligible borrowers.  Furthermore, going forward, we urge you to include borrower defense relief in the administrative review and findings process from the outset.  We, specifically, request the status of ED’s borrower defense reviews for cases in which findings of misconduct were used to take action against the school—including CSI, Globe University and Minnesota School of Business, Marinello, Medtech, and Charlotte School of Law.  We also request the status of ED’s borrower defense reviews for Vatterott Colleges and schools owned by Dream Center and Education Corporation of America.

Closed School Discharge

As you know, pursuant to 34 C.F.R. § 685.214(c)(l)(i)(B), you have the authority under “exceptional circumstances” to extend the closed school discharge look-back window beyond 120 days.  Yet, with a few limited exceptions, you have failed to exercise this authority—even where evidence and fairness demand it.  In its report, Student Defense urges ED to conduct a wholesale review of school closures and extend the look-back windows, in a consistent manner, where appropriate.  We agree.

For example, we urged you more than one year ago to extend the look-back period for students who attended ITT Tech (ITT).   As [we] explained in our previous letter, students who withdrew more than 120 days prior to ITT’s September 3, 2016 closure should not be penalized for abandoning what they reasonably—and correctly—believed was a sinking ship.  We have also urged a look-back extension in the cases of Vatterott Colleges, Charlotte School of Law, schools previously owned by Dream Center and Education Corporation of America.

In addition, the Student Defense report makes the case for extensions for Marinello, Medtech, Westwood College, and schools previously owned by Education Management Corporation.  With respect to each of these institutions and many others, ED has evidence—again, often from its own program reviews—that constitutes “exception circumstances” and warrants an immediate extension of the closed school discharge look-back window.  We call upon ED to extend the look-back dates for each of these institutions and, consistent with the automatic closed school discharge provision, provide this relief to borrowers automatically where applicable.

Please provide a response to our request no later than November 12.  Thank you for your consideration.

Sincerely,

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