DeVos Accused of Violating Settlement With Blanket Student Debt Relief Denials

SAN FRANCISCO (CN) — Student borrowers claim Education Secretary Betsy DeVos is violating the terms of a settlement and her department’s own rules by using “boilerplate language” to issue blanket denials of student debt relief claims.

This past April, DeVos agreed to settle a federal class action claiming the Education Department illegally stopped processing borrower defense claims for students who say they were defrauded by for-profit schools. The Education Department agreed to issue decisions on more than 160,000 borrower defense claims within 18 months.

U.S. District Judge William Alsup preliminarily approved the proposed settlement in May.

On Thursday night, attorneys for student borrowers filed a motion to enforce the terms of the agreement ahead of an Oct. 1 final settlement approval hearing.

As of Aug. 24, the Education Department had denied 94% of the 78,400 final decisions it made on student borrower defense claims under the terms of the preliminary settlement.

According to the plaintiffs, each denial consisted of “boilerplate language” plugged in from a set of predetermined responses, such as “insufficient evidence,” “failure to state a claim under borrower defense regulation” and “other.”

The plaintiffs say federal law and Education Department rules require responses that contain a more detailed explanation of the facts found and decision made on each application.

“The denial notices make it impossible to confirm that the department is considering borrowers’ claims based on the merits. This prevents borrowers from understanding their decision and from seeking review or appealing the denial effectively,” said Eileen Connor, legal director at the Project on Predatory Student Lending at Harvard Law School, which represents the plaintiffs, in a statement Friday.

Class member Yvette Colon submitted a 175-page application for debt relief, claiming her college, Sanford Brown in New York, misrepresented its accreditation status and deceived her into believing she could become a licensed medical sonographer after completing the program. She claims the misrepresentations violated New York state’s consumer protection laws. She qualified for and received restitution through an agreement the New York attorney general struck with Sanford Brown’s parent company, Career Education Corporation.

Despite those supporting facts and documentation, the Education Department denied her claim for debt relief, stating she had supplied “insufficient evidence.”

“Such form responses give a borrower no clue about the supposed deficiencies of the application, or whether any evidence was actually reviewed,” plaintiffs’ lawyers wrote in their motion to enforce the settlement Thursday.

The plaintiffs say the department’s “outside coverage date” response is also legally deficient because even if students fall outside the “window” of presumptive eligibility, they are still entitled to a decision on the merits of their individual application.

“Nowhere in the decision are the applicable ‘coverage dates’ explained or disclosed,” the plaintiffs argue.

The Education Department’s use of “other” as a reason to deny borrower defense claims also “underscores the bald inadequacy” of the responses, the plaintiffs contend.

“It is beyond imagining that a borrower could make any reasonable sense out of ED’s denial when their only notice about the reason for the decision is ‘other,’” the plaintiffs argue in their motion.

Responding to concerns raised about the denial letters in a Sept. 4 court filing, the Education Department said the use of form denial letters is “entirely appropriate and unsurprising.”

“The letters provide standardized justifications based on common deficiencies that the department has identified across thousands of applications,” the department argued.

The department said it would not have agreed to clear more than 168,000 cases in 18 months “if that meant issuing the type of personalized, detailed decisions plaintiffs now suggest are required.”

But the plaintiffs say the law requires the Education Department to issue denial letters that contain more specific information on what evidence was reviewed and why that evidence or other aspects of the application were considered insufficient.

“The department should be acting in good faith to decide students’ claims based on the law and the evidence. As we have throughout this case, we are just trying to get the Department of Education to follow the law,” Connor, of the Project on Predatory Student Lending, said in a statement Friday.

The Education Department did not immediately respond to an email requesting comment Friday.

Follow @NicholasIovino

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