A federal court on Friday ordered the U.S. Department of Education to stop using Social Security data to determine how much loan forgiveness to give students of the now-shuttered, for-profit Corinthian college chain. The ruling effectively halts the program, for now.
The program’s critics cheered the decision, but it’s not a complete victory. The ruling noted the Trump administration could come up with a new process for determining how much to repay each defrauded student. The court also rejected the plaintiffs’ claims that the decision to offer only partial loan forgiveness was “arbitrary and capricious” and violated students’ due process rights.
The Obama administration opted to repay all loans taken out by former Corinthian students. But the Education Department had only processed about half the requests when President Donald Trump took office. Newly appointed Education Secretary Betsy DeVos halted the program and promised to come up with a new plan that accounted for the harm students actually suffered, while also protecting taxpayers from picking up the total tab. DeVos ultimately decided to use income information provided by the Social Security Administration to compare the former students’ earnings to others who attended similar programs. But using that data violated the federal Privacy Act, the court ruled.
A judge will decide after a June 4 hearing whether to order DeVos to restart the full loan repayment program or give her more time to come up with a new way to compare earnings data. The government has already spent $550 million to repay for-profit college students’ loans. —L.J.