A federal judge recently denied a settlement between the Department of Education and borrowers who sought relief of student loan debt.
The proposed settlement deal would have resolved nearly 170,000 outstanding applications for student loan debt relief within a year and a half of the deal’s effective date with the opportunity for appeals if claims were denied, Forbes reported. If claims were still pending after this time period, borrowers were set to have 30% of their federal student loans discharged by the Education Department for every month over the deadline.
The settlement aimed to resolve allegations that the Department of Education failed to process applications for relief of student loan debt over the course of 18 months. Although DeVos said this time was being used to review student loan debt relief processes started by the Obama administration, students filed a lawsuit against the federal agency challenging the unreasonable delay.
Unfortunately, according to U.S. District Judge William Alsup’s recent denial of the settlement, Education Secretary Betsy DeVos and her department have circumvented the terms of the proposed deal by denying the large majority of pending applications.
Since reaching the proposed settlement in April, the Education Department has reportedly approved only 4,400 requests for relief of student debt out of the 78,400 claims processed.
The other 94% of claims were reportedly denied.
After counsel for the settlement class discovered this issue, they reportedly sought an explanation from DeVos. In response to these allegations, DeVos reportedly failed to provide a reasonable explanation though she admitted to using four different form denial notices. Given a lack of briefing on the issue, class counsel reserved the issue for the settlement fairness hearing.
At the Oct. 1 fairness hearing, over 600 participants, lawyers, borrowers and members of the public joined the hearing held over the phone. Around 300 people requested to speak, though only 14 borrowers were chosen by the Court.
These representatives voiced a common concern: DeVos’ string of form denials. After 94% of claims were quickly denied using form denials, borrowers say the terms of the proposed agreement have been violated and that their trust in the department’s processes has been shaken.
“After justifying eighteen months of delay largely on the backbreaking effort required to review individual applications, distill common evidence, and ‘reach considered results,’ the Secretary has charged out of the gate, issuing perfunctory denial notices utterly devoid of meaningful explanation at a blistering pace,” Judge Alsup noted.
According to Judge Alsup, DeVos has failed to properly respond to student loan debt relief claims in a thoughtful way. In his denial motion, the judge questioned whether DeVos’ form denials were a legal response to claims and threatened to bar the Education Department from using these form denials in the future.
Moving forward, Judge Alsup has ordered the Department of Education to provide more details about its claim reviewal process. The agency has two months to provide this information.
The Court has also called for an updated record and discovery before the parties attempt once again to resolve the case.
“The Court is disappointed that it has come to this,” Judge Alsup laments. “This settlement was supposed to jumpstart a long delayed regulatory process, intended to at least get reasoned decisions, even if reasoned denials, to hundreds of thousands of student-loan borrowers.”
According to a statement to the Washington Post from Angela Morabito, a spokesperson for the Department of Education, the regulator will review Judge Alsup’s ruling.
“Just because a claim was filed does not make it valid and eligible for taxpayer-funded relief,” Morabito noted. “The Department is following the publicly available process for resolving claims as quickly as possible, so those students who are eligible and were harmed get the relief they deserve.”
Have you sought relief of student loan debt through the Department of Education? Was your application denied? Share your experiences in the comment section below.
Plaintiffs and proposed Class Members in the student loan debt relief class action lawsuit are represented by the Project on Predatory Student Lending.
The Relief of Student Loan Debt Class Action Lawsuit is Theresa Sweet, et al. v. Elisabeth DeVos, et al., Case No. C 19-03674 WHA, in the U.S. District Court for the Northern District of California.
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99 thoughts onJudge Rejects Student Debt Relief Settlement, Blames DeVos for Denials
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I don’t understand it’s already been acknowledge that the education department new corithen colleges were knowingly allowing these colleges to profit in acts of fraudulent unlawfully tactics of student loan fraudulent intrappment&miss leading students as my self in fraudulent education,jlife time of job careers,,threatening harassment payments,the colleges took out multiple sets of loans out from the goverment in my name that was unlawfully after I failed the first course ,frauding me to sign a second set of loans .my original loans should have been extended not new set of loans taken out justify this???but yet the colleges&education department continue to distroy fruaded students lives ,collect on earning payment deductions every month cause the courts are allowing Corinthian colleges and education department to continue to pass the loan debit off to third party companies every time a law suite is filed .the company who holds the loan debit sells all the debits that were ruled by the courts to be forgiven both offices don’t hold the debits at time the courts rule in students favor for debit forgiveness for this fraud.this constant escape goat decades later are still harming students ,credit scores, report fraudulent debit with derrogitory remarks every month be reported to all three bueros,unlawfully withdraws from students wage earning checks every month,distorying students life’s over and over continue to inflict harming students lives as my self frauding not just the students but if the courts need to prove there not in bed with e.d and these closed corithen colledgesand these debit collectors and Devo’s ass dragging possessing and dismissing these fraude student loan debits .so it’s time for the courts to provide evidence individually provide financial investments and spouse investments don’t link for profiting stocks,bank&investment share holdings in all related company’s of this lawsuits and affiliations linked of any kind in any way for profiting from these frauds debit to continue to fraud the courts and students of promises and rulings that never clear students from harm and clear students names once and for all
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I don’t understand it’s already been acknowledge that the education department new corithen colleges were knowingly slowing these colleges to profit in acts of fraudulent unlawfully tactics of student loan fraudulent intrappment&miss leading students as my self in fraudulent education,jlife time of job careers,,threatening harassment payments,the colleges took out multiple sets of loans out in my name that was unlawfully after I failed the first course ,frauding me to sign a second set of loans .my original loans should have been extended not new set of loans taken out justify this???but yet the colleges&education department continue to distroy fruaded students lives ,collect on earning payment deductions every month cause the courts are allowing Corinthian colleges and education department to continue to pass the loan debit off to third party companies every time a law suite is filed .the company who holds the loan debit sells all the debits that were ruled by the courts to be forgiven both offices don’t hold the debits at time the courts rule in students favor for debit forgiveness for this fraud.this constant escape goat decades later are still harming students ,credit scores, report fraudulent debit with dirogitory remarks every month be reported to all three bueros,unlawfulk withdraws from students wage earning checks every month,distorting students life’s over and over continue to inflict harming students lives as my self frauding not just the students but if the courts need to prove there not in bed with e.d and these closed corithen colledgesand these debit collectors and Devo’s ass dragging possessing and dismissing these fraude student loan debits .so it’s time for the courts to provide evidence individually provide financial investments and spouse investments don’t link for profiting stocks,bank&investment share holdings in all related company’s of this lawsuits and affiliations linked of any kind in any way for profiting from these frauds debit to continue to fraud the courts and students of promises and rulings that never clear students from harm and clear students names once and for all
Please add me.
I was apart of this lawsuit and was so distraught that outcome of me being denied since filing in June of 2018. I was so distraught that I had been challenged of how to go forward since the denial option was that I had to start entire process over. Been waiting now for over four months since denial trying to determine what to do. I was apart of University of Phoenix that had been offered a lawsuit for certain qualifications. I had gotten a deadly level of pneumonia in hospital for over 45 days and was going they divorce all at once. I was supposed to be opt out for moment since I could not function and the counselor never offered this option. This was in 2010 and still struggling.
Please include me! Always so much trickery ! I was entitled and waited well over a year. Felt good once notified I was apart of class action suit.