ATLANTA - There is some pretty big news about student debt loan repayment. President Trump vetoed a bi-partisan bill to help students with loan forgiveness when their colleges closed due, in part, to fraud allegations.
A quick recap of the original issue. For-profit colleges exploded after the last recession. Folks needed to get back to school to reinvent themselves. But that bubble burst, too, as some of the schools were accused by the federal government of fraud for a variety of reason.
The question arose: Should students have to repay loans, believed to be secured through fraudulent means? And remember, many of those schools shut down.
Here’s a notable timeline. The Obama Administration created the borrower defense to repayment. It said those federal loans should be forgiven if the school was in involved in deceptive practices in order to secure those loans.
As it was about to kick in, Betsy DeVos, head of the Department of Education under a new administration, said, hold on; it’s too broad. She wanted to narrow eligibility. She said students would have to prove financial harm.
A federal judge ordered Ms. DeVos to stick to the original rule.
Congress in a bi-partisan vote said, no, it’s not the students’ fault. They should be given loan forgiveness because the loans were received through fraud.
The president vetoed it siding with his education secretary.
I talked with a student who attended Argosy University. It had 12 campuses nationwide and shut down March a year ago in this net of fraud allegations.
“I have to pay it back. It’s like $20,000 or something,” student Homad Ahmed explained to me. “And the credits are not transferring anywhere.”
The school is closed and no other school will accept the credits. Interest, she said is accruing on the past. She says her monthly student loan bill will be beyond her budget.
“Monthly, it’s like $300 something. About $400,” she said.
It’s beyond her budget because she’s paying for another school now and has no job in her field.
With the pandemic and the national protests, this is not getting the attention it normally would by Congress.
These young people are in a jam. According to national data, more than 98 percent of the applications for loan forgiveness are not being rejected.