Colleges Win, Student Borrowers Lose

Sep 25, 2014 by

The U.S. Department of Education is turning its back on at least 1,000 borrowers in favor of shielding their former colleges from potentially crippling sanctions that would have resulted from high rates of default on federal student loans.

The move, announced late Tuesday and further detailed on Wednesday, concerns an Obama administration decision not to punish as many as 20 schools for loan defaults caused by questionable servicing practices overseen by the Education Department.

Borrowers, however, were provided no such relief. The estimate of the number of affected borrowers is only a small subset of those with loans in default as a result of questionable servicing practices the Education Department identified on Tuesday.

“Borrowers aren’t getting any relief or similar consideration from the Education Department,” said Debbie Cochrane, research director at the California-based Institute for College Access & Success, which advocates affordable education. “If the school isn’t held accountable for the default, then the borrower shouldn’t either.”

As many as 20 schools won’t lose access to critical federal student aid programs, an Education Department official said Wednesday. Losing access to taxpayer-provided student aid would be the equivalent of a death sentence for most colleges. The institutions that were let off the hook include for-profit schools, private and public colleges, and historically black colleges and universities, the official said on a conference call organized for news media.

The department did not specify the number of schools aided by its new policy. Nor would it make officials available for a subsequent interview, or answer emailed questions.

via Colleges Win, Student Borrowers Lose In Obama Administration Absolution.

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