In this previous post I talked about the new Department of Education policy to no longer issue full forgiveness on student loans for students which had been clearly screwed over.
In their unbridled dystopian view of how to handle victims, the Department of Education decided only partial forgiveness may be available for students who attended scam schools. Keep in mind previous forgiveness awarded was for 100 percent of the loan balance.
Relief from fraud will be dependent on the current earnings of the victims. Victims earning 70% and above of the income of their peers will only receive a 30 percent forgiveness of the fraudulent student loans. So to be clear, that income test is against the other students who were the victims of the same fraud and not the general population.
As a bonus the Department of Education gives fraud victims this carrot “to mitigate the inconvenience for how long it has taken to adjudicate claims, the Department will apply a credit to the interest that accrues on loans starting one year after the borrower defense application is filed.” – Source
It appears the Department of Education is hot and heavy to roll this new partial forgiveness of federal student loans for debtors confirmed to have been taken by the school.
One big issue with making forgiveness decisions based on current debtor income is there is no consideration if the current income is from the field the student even studied at the sham school.
But to determine what debtors are earning, it is alleged the Department of Education obtained Social Security information without authorization.
According to the Los Angeles Times, some students have already received notices only have their fraudulent debt will be forgiven as a result of the Department of Education new policy.
The department “has secretly and illegally coopted Social Security data to try to argue for something less than the complete cancellation and refund that these borrowers are due,” attorney Joshua Rovenger said who is representing some students in a suit against the Department of Education.
As the Los Angeles Times stated, “The Education Department announced in December that it will start granting some former students at the now-defunct Corinthian Colleges only partial federal student loan forgiveness, in part to save taxpayers’ money. The agency said it will use students’ earnings data to determine how much of their loans to forgive.”
I don’t know about you but this sure feels like a mugging on the way home from a trip to the emergency room for a plane crash.