December 10, 2014

Senators Urge Department Of Education To Discharge Loans For Students At Colleges That Break The Law

Letter Also Asks ED to Use Existing Authority to Immediately Discharge Federal Loans for Corinthian College Students With Claims Against School

WASHINGTON, DC - United States Senator Elizabeth Warren (D-Mass.) and twelve Senate colleagues sent a letter on Tuesday calling on the Department of Education (ED) to implement clear policies for using its existing authority to discharge federal student loans for students who attend colleges that break the law. The letter was signed by Senators Warren, Barbara Boxer (D-Calif.), Richard Durbin (D-Ill.), Jack Reed (D-R.I.), Sheldon Whitehouse (D-R.I.), Jeff Merkley (D-Ore.), Al Franken (D-Minn.), Richard Blumenthal (D-Conn.), Brian Schatz (D-Hawaii), Tammy Baldwin (D-Wis.), Christopher Murphy (D-Conn.), Mazie Hirono (D-Hawaii), and Edward Markey (D-Mass.).

In the letter, the senators ask ED to immediately discharge loans for students who attended Corinthian Colleges, Inc. campuses and have legal claims against the school. Corinthian Colleges is currently the subject of lawsuits by the Massachusetts and California state attorneys general and the CFPB, and is under investigation by more than a dozen other state attorneys general for unlawful practices.

"When students take on loans to pay for college," the senators wrote in the letter, "they are making a serious financial decision that will affect them for years to come...If colleges fail to hold up their end of the bargain -- if they break the law in ways that bear on their students' educational experience or finances -- students should not literally be stuck paying the price."

The senators also highlighted the importance of strong federal legal protections for borrowers to ensure accountability for schools and for regulators.

"Discharging debt where schools illegally take advantage of their own students costs the government money," wrote the senators. "As a result, these protections provide a significant incentive for federal regulators to do their jobs on the front end to keep colleges from breaking the law in the first place."

In the letter, the senators call on ED to implement clear policies and procedures that put teeth into its existing legal authority to discharge federal student loans when borrowers have legal claims against their schools. The senators wrote, "Without such a process, duplicitous colleges are free to break the law, to suck down billions in federal student loan dollars, to treat students unfairly -- and to stick borrowers with the bill. This is exactly what we have seen at Corinthian Colleges."

Read the full letter here