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Facing a federal lawsuit and growing pressure to act, Education Secretary Betsy DeVos said Friday she would forgive loans to more than 1,500 borrowers who attended two for-profit colleges that closed l ‘last year.
Students who attended the Art Institute of Colorado and the Illinois Institute of Art from Jan. 20, 2018, to the end of last year will have their federal student loans forgiven, DeVos said, and students who attended 24 other schools belonging to the same company can get loans cleared if they registered after June 29, 2018.
The decision affects schools in the Dream Center college chain, which collapsed last year and closed campuses across the country.
DeVos has come under mounting criticism over his handling of federal loan forgiveness programs, which were expanded by the Obama administration following the collapse of Corinthian Colleges and other chains of purpose-built universities. lucrative accused of lying to students to get them to enroll.
Under DeVos, the Department of Education has stopped processing claims from students who say they were defrauded by their schools, leaving tens of thousands of borrowers in limbo as they apply for their loans to be forgiven. DeVos also moved to tighten eligibility rules, prompting backlash from Democrats and a flurry of lawsuits from students and advocacy groups.
In the latest case, a federal lawsuit against the Department of Education says it illegally provided federal student aid to schools in Colorado and Illinois, even after they lost their agency’s stamp of approval. accreditation. The loss of approval should have made the schools ineligible for funding, the suit says, but instead they were allowed to continue operating without telling students the institutions were in trouble.
But on Friday, the department blamed the accreditation group, the Higher Education Commission, saying it had assigned the schools a “newly developed and ill-defined accreditation status.” The ministry said it believes the schools should not have lost their accreditation and that by revoking it, the accreditor is leaving students with tarnished credits that may not be accepted by other schools.
“The department is committed to holding institutions and accreditors accountable to the students they serve,” DeVos said in a statement. “In this case, the students failed and deserve to be healed.”
The Higher Learning Commission did not directly respond to DeVos’ allegations, but applauded his decision to provide relief.
“HLC policy requires institutions to promptly notify their students and other stakeholders of any changes to their accreditation status,” the group said. “In this case, the institutions failed to inform their students appropriately, as required and specifically requested by HLC.”
Students from former Dream Center schools sued DeVos on Oct. 22, demanding loan forgiveness and other measures that DeVos broadly agreed to in his Friday announcement. Student Defense, a Washington advocacy group that helped file the lawsuit, celebrated the news as a victory.
“Finally, the Department is taking action to cancel the illegal debt it issued for students who were defrauded by the Dream Center,” said Eric Rothschild, director of the group. He added that the group will continue to work to ensure borrowers get the relief they deserve.
In a separate case last month, a federal judge found DeVos in contempt of court and fined $100,000 after the department violated a court order barring it from taking loans from former Corinthian students. . The department filed an appeal, asking the judge to reconsider.
At the same time, House Democrats are threatening to compel DeVos to appear at a hearing and explain why his agency did not provide the loan forgiveness that was previously promised to thousands of former Corinthian students. DeVos declined requests to face the House Education Committee and suggested a private meeting with its chairman, Rep. Bobby Scott, on Thursday.
The collapse of the Dream Center also caught the attention of Democrats. In an Oct. 22 letter, Scott threatened to subpoena the agency for documents detailing its role in shutting down the channel. Documents released by Democrats suggest the department provided nearly $11 million in student aid to schools in Illinois and Colorado, even though officials knew their accreditation had been revoked.
The department then granted both campuses temporary status as nonprofit institutions, which exempted them from certain rules and restored their eligibility for federal funding. The lawsuit filed by former Dream Center students says the move was an attempt “to unlawfully redress and cover up his prior misconduct.”
The department denied any wrongdoing in the case.