The Department of Education (ED) has created a new website for borrowers seeking debt relief after being defrauded by college.
But an expert involved in litigating those borrower defense claims said the changes were mostly cosmetic.
“Throughout this administration, what we’ve seen is the substitution of process for substance,” Toby Merrill, director of the Predatory Student Loans Project at Harvard Law School, told Yahoo Finance.
“None of the actions taken by the ministry have provided relief to the borrowers,” she added, “and that’s all they need. I think it’s a distraction – it’s an intentional distraction. “
Clare McCann, deputy director of New America, a federal policy think tank, said that while it “seems a little awkward and it’s unfortunate that it took so long, a single consolidated website with a Online application will be extremely helpful to borrowers. “
The new website attempts to improve the borrower defense process, which involves alumni of allegedly predatory schools seeking loan cancellation.
“ Our borrower defense mechanism is not working at all ”
There are some obvious limitations with the recently unveiled process. For example, the website states that only those with direct loans can get debt relief.
“If any of your Federal Student Loans are Federal Family Education Loan Program (FFEL) loans and / or Federal Perkins Loan Program loans, they are not eligible for discharge under the law or borrower’s repayment defense regulations, ”the website says.
About 8000000 borrowers with Federal Family Education Loans (FFELs) and commercially owned and federally backed Perkins Loans are effectively excluded from this process.
Another limitation is that if a borrower has defaulted on their federal loans that are in collections, the website indicates that a borrower’s defense request triggers a collections shutdown.
The site also assesses the interest an applicant would generate if they abstained – as well as how much they owe if their application ends up being denied – which could discourage borrowers from applying for the process in the first place.
Overall, Merrill pointed out, the website is not getting to the root of the problem.
“Right now our borrower defense mechanism isn’t working at all, so I still think people should have started there,” she said. “I’m not concerned about the shape of the app.”
‘I know it’s disappointing’
The borrower’s defense rules were originally enshrined in law through the Higher Education Act in the early 1990s and were intended to help victims fraudulent schools seek redress.
Under existing law, borrowers with federal loans are eligible for loan discount if a college or university has misled them or has engaged in other misconduct in violation of certain state laws.
After the Great Recession, enrollment in for-profit schools “skyrockets in the first decade of the period, almost quadrupled between 2000 and 2011, ”according to the New York Fed.
The new website offers the same tool that the ministry had paused few months ago, who conducted an investigation by the House Education Committee.
A whistleblower complaint, discovered by American journalist News in June, found one which alleged that the FSA’s Deputy Principal Under-Secretary had pushed back on changes that made the site more user-friendly.
In October, the education committee revealed documents in which they said showed how it went.
“I know it’s disappointing,” wrote an FSA official in an email, “as many of us have done a lot of work to get there.”
This post has been updated to remove a quote from an anonymous member of Congress.