Sec. Betsy DeVos is pictured speaking at the Conservative Political Action Conference in Maryland this year.

According to an unnamed department official, Secretary of Education Betsy DeVos is planning to settle the student loan forgiveness policy regarding students who claim to have been defrauded by for-profit colleges.

DeVos’ plan would base student loan forgiveness on the average income of graduates that were in similar school programs. The main takeaway from this is that many students could only receive partial loan forgiveness, depending on an industry salary average.

This may come as a surprise to many students given that the Obama Administration implemented the Borrower Defense Rule. However, there have been several developments in the recent past that have cast doubt on whether the policy would survive under the new administration.

DeVos froze the Borrower Defense Rule before it was set to take effect in July 2017, claiming it was unfair to both borrowers and colleges. DeVos said that the department would create committees to update and improve the rule.

The department had been working with a staffing agency to deal with the large accumulation of student loan claims. Originally, DeVos said the department planned to fulfill the 16,000 claims already being processed, but nothing had been approved since she took office last February.

Now, the most recent development points towards only partial loan forgiveness as opposed to total forgiveness. If this plan is put into effect, it could leave many students who were counting on loan forgiveness in a difficult financial situation. It is unclear how this new policy would leave the typical borrower.

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Several developments in the for-profit college industry led to the controversy that surrounds student loan forgiveness, Betsy DeVos, and the Department of Education today.

In 2015, Corinthians College closed 28 campuses after being dealt a $30 million fine by the Department of Education. The Department of Education claimed that Corinthians falsified data and deliberately misled its students. A year later, ITT Technical College met a similar fate when it announced it was closing more than 100 colleges after the federal government barred it from allowing any new students to use federal aid to pay for their tuition.

Both school closings left tens of thousands of students saddled with student loan debt and with no degree to show for it. The Department of Education soon found itself flooded with requests from students asking for their loans to be forgiven.

This caused the Obama Administration to update the Borrower Defense Rule to provide sweeping protections to indebted students who attended for-profit colleges. It helped provide faster loan forgiveness to students whose colleges had closed.

image copyright Gage Skidmore