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Students defrauded by for-profit colleges may not get full relief

Student loan rule delay controversy

WASHINGTON - The Education Department is abandoning the Obama administration's practice of wiping out the loans for all students who were swindled by the now-defunct Corinthian college chain.

Under President Barack Obama, tens of thousands of students deceived by the for-profit school had more than $550 million in student loans canceled in full.

But Education Secretary Betsy DeVos announced Wednesday she is putting a new process in place that she says will be more efficient. The department will now look at average income in order to determine the value of a student's education. Then it will decide whether to forgive the loan partially or in full.

"No fraud is acceptable, and students deserve relief if the school they attended acted dishonestly," DeVos said in a statement. "This improved process will allow claims to be adjudicated quickly and harmed students to be treated fairly. It also protects taxpayers from being forced to shoulder massive costs that may be unjustified."

Eileen Connor, a litigator at Harvard University's Project on Predatory Student Lending, called the decision "unlawful and arbitrary."

Tips for paying off student loan debt

For-profit colleges like Corinthian are linked with the vast majority of student fraud complaints, The Century Foundation recently found in an analysis of Education Department data.

Students who attended for-profit colleges filed nearly 99 percent of the requests for student loan forgiveness alleging fraud, according to the a liberal-leaning think tank.

More than 76 percent of claims came from students who attended a Corinthian school. The Education Department fined the college $30 million for misrepresentation after it collapsed in 2015 amid a cash shortage and fraud allegations.  

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