This morning, U.S. Senator Elizabeth Warren sent a scathing letter to the U.S. Department of Education highlighting some troubling data about the way that the Department treated Corinthian Colleges borrowers eligible for fast track relief. The Department announced that these borrowers were eligible for relief after finding that nearly 100 Corinthian campuses (operating as WyoTech, Everest, and Heald) had committed fraud in order to induce students to enroll.
Senator Warren’s staff found that roughly 80,000 defrauded borrowers who are eligible to have their loans canceled are still in some form of collection. Even worse, 30,000 of these borrowers are in an “Administrative Offset.” This means that they may be losing their social security benefits, having a portion of their wages taken every month, and losing tax refunds – including their Earned Income Tax Credits (EITC).
For many years, NCLC has written about the draconian consequences the Department of Education imposes on borrowers in distress (see here, here and here). Knowingly imposing these punitive measures on vulnerable borrowers who were the victim of fraud is unconscionable. As Senator Warren highlights, the Department has seized benefits, including EITC payments from this group of borrowers. Seizing the EITC has a devastating impact on families and children. In May, we shared some of the stories we heard in our brief calling for an end to the seizure of the EITC.
Because the Department of Education is taking money designed to keep children out of poverty in order to repay a debt that should not exist underscores both why (1) the government needs to stop seizing EITC benefits and (2) that the Department needs to provide immediate and full relief to all of the borrowers defrauded by Corinthian Colleges.
We thank the Senator for taking a strong stand to protect student loan borrowers. On behalf of our low-income clients, we join her in demanding that the Department halt collection of Corinthian borrowers’ debt and discharge their loans.