Former Education Secretary Betsy DeVos made no secret of her disdain for a program intended to forgive the federal student loans of borrowers who were ripped off by schools that defrauded their students. She called it a “free money” giveaway, let hundreds of thousands of claims languish for years, and slashed the amount of relief granted to some successful applicants to $0.
Then, after a class-action lawsuit made it impossible to stall any longer, her agency built what amounted to an assembly line of rejection.
In Ms. DeVos’s final year in office, her agency denied nearly 130,000 claims — far surpassing the 9,000 rejections in the prior five years — with a system that pressured workers to speed through applications in a matter of minutes, according to internal Education Department documents filed in federal court.
The department aimed to process 5,000 applications a week, the documents show — a standard that required agency employees to adjudicate claims that could stretch to hundreds of pages in less than 12 minutes. Those who did it faster were eligible for bonuses; those who took longer risked getting fired. Agency employees rejected claims against hundreds of schools for not including written evidence that borrowers were never required to submit. And the department frequently disregarded its own findings of wrongdoing by schools when reviewing claims from their students.
wrote in a 2019 memo. Her group had evaluated cases involving 1,400 schools, she wrote, and approved claims involving only three. All the approvals were based on criteria established before Ms. DeVos took office.
The documents were obtained under court order by lawyers in the class-action case, which involves more than 200,000 people who brought claims under a relief program known as borrower defense to repayment. The program permits borrowers who were substantially misled by their schools to have their federal student loans forgiven. Once little used, the system was flooded with claims during the Obama administration after a government crackdown toppled a series of large for-profit chains.
Most of those claims were still lingering when Donald J. Trump took office, and the lawsuit, filed in 2019 in federal court in San Francisco, sought to compel the department to review claims that had languished for as long as four years. In a settlement agreement struck last year, the department agreed to speed things up and make decisions.
In seven months, the department rejected 91,000 applications — a flood of denials that the borrower’s lawyers described as “nearly worthless pieces of paper that do not explain their decisions.”
strongly criticized the department for “issuing perfunctory denial notices utterly devoid of meaningful explanation at a blistering pace,” and he ordered the department to turn over records — a rare step in lawsuits involving federal agencies’ decisions.
The Education Department declined to comment on the newly filed documents. Ms. Nevin, who still heads the borrower defense team, did not respond to a request for comment. A message left for a representative for Ms. DeVos was not returned.
Lawyers for the department said in an earlier court filing that the agency’s effort to quickly clear its backlog “has meant, to a large extent, focusing on claims that can be denied based on a lack of relevant evidence.”
Ms. DeVos’s successor, Miguel Cardona, took office this month, and on Thursday began dismantling the department’s approach to claims from defrauded borrowers. Mr. Cardona ended and retroactively reversed Ms. DeVos’s policy of granting partial relief, instructing the agency to forgive $1 billion in debt owed by 72,000 people with successful claims — all of them on grounds established during the Obama administration.
“Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct,” Mr. Cardona said.
But that action did nothing to help people like Theresa Sweet, the lead plaintiff in the class-action lawsuit, whose forgiveness application was denied last year after a four-year wait. She graduated in 2006 from the Brooks Institute of Photography, a for-profit school that closed a decade later, after its accreditor accused it of “willfully misleading” prospective students.