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Trump Is Under Pressure To Deliver On Obama's Student Loan Forgiveness

After a 120-day deadline passed, students promised forgiveness say they still haven't seen anything.

Posted on May 24, 2017, at 10:11 a.m. ET

Mike Theiler / AFP / Getty Images

Danielle Ramos got the phone call in January: the thousands of dollars she'd taken out in student loans to attend a now-defunct for-profit college were going to be forgiven. The American Career Institute had fallen apart during her time there, and Ramos never finished her degree. The credits she earned didn't even transfer to community college.

The Education Department, faced with evidence that ACI had systematically misled its students, decided to wipe away Ramos's loans — and those of 4,500 other students across five ACI campuses.

But a new president has since taken office, and so has a new education secretary. Ramos had been told in January her loans would be forgiven within 90 to 120 days, but 90 days later, she'd heard nothing. Then, the 120-day deadline passed. Still nothing.

Ramos, a single mother, began to worry. When she checked with Navient, her loan servicer, they told her nothing had changed and her debt was still owing. She had obtained a two-year pause on loan repayments, but that was now over, meaning she would soon have to start repaying her $15,000 in loans, plus $2,000 in interest that had slowly built up.

The January call — and its promise of debt forgiveness — was in doubt.

"When I got that call, I was just ecstatic," Ramos told BuzzFeed News. "But then nothing happens, and there's a new president, and a new Department of Education, and what if they're going to change their minds? Can they do that?"

As her new administration gets to work, Education Secretary Betsy DeVos is facing mounting pressure to make good on an Obama-administration promise: to forgive the loans of thousands of students who had been defrauded by their schools. Those schools include ACI and another controversial for-profit chain, Corinthian Colleges, which at its peak enrolled more than 100,000 students nationwide.

ACI students are a special case, because thousands of them were automatically granted debt forgiveness by the government. The evidence that ACI had misled students was so strong, the department said, that eligible students would not even have to submit applications alleging they had been defrauded.

But there is no indication that any ACI students have yet received loan forgiveness, said Massachusetts Attorney General Maura Healey in a letter last week to Education Department undersecretary Jim Manning.

ACI students told the Massachusetts attorney general that they had been misled about the school's quality and accreditation. One student said they had gone most of the course without a certified teacher; another said her teacher had been arrested for drugs partway through the course, then replaced four different times over the span of 7 months.

"It was a total nightmare," one student wrote in a complaint obtained by BuzzFeed News.

Hundreds of borrowers, Healey said, told her office that they have yet to receive a loan discharge — despite what she called "extreme financial distress."

In fact, current and former Education Department employees have told BuzzFeed News that it appears the process of forgiving the loans of defrauded students has virtually ground to a halt in the Trump era. Claims are sitting untouched, they said, and many of those that have been approved — like Ramos — have not seen their loans cancelled.

Senator Dick Durbin, a Democrat, called for answers on "stalled student debt relief" in a statement last week, noting the thousands of students still left waiting after the 120-day deadline had elapsed.

"The Department must uphold its responsibility to provide relief for the students whose lives were disrupted by fraudulent institutions,” he said.

The Education Department did not respond to five requests for comment from BuzzFeed News. Last month, a department official told Politico that the department is conducting a "full review" of the borrower defense program, but "has not stopped approving borrower defensed repayments." The official would not say how many claims have been approved.

The rule allowing students defrauded by schools to have their loans cancelled was one of the signature pieces of the Obama administration's education legacy — a consumer protection regulation that was part of a wider battle against for-profit colleges.

Ramos's claim against her now-shuttered school was one of scores that were approved at the tail end of the Obama era, when officials rushed to approve debt forgiveness requests before Trump took office. The cost of loan forgiveness at ACI alone, according to the Massachusetts attorney general, would total $30 million.

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