Colleges Win, Student Borrowers Lose In Obama Administration Absolution

Career College Central Summary:

  • 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.orrowers, 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.
  • 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.
  • The Huffington Post identified 13 schools that may have been affected by the policy shift: 

    • Seven are for-profit institutions
    • Four are historically black colleges
    • Two are community colleges
  • Only one — Frank Phillips College, a community college in Borger, Texas — confirmed that it was aided by the Education Department's decision.
  • Another — Maysville Community and Technical College, a community college in Maysville, Kentucky — said it assumed it was helped by the move.
  • Borrower advocates, experts on federal student aid programs, and one prominent congressional Democrat denounced the Education Department's decision, accusing it of putting the interests of for-profit schools over those of borrowers in distress.
  • It is likely to further cement the reputation of an Education Department that is seen as valuing its contractors and colleges over students.

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