Education Secretary Betsy DeVos forced to cancel $150 million in student loans after losing court battle

Carolyn Kaster/AP

Sec. of Education Betsy DeVos.

• The Department of Education will cancel $150 million in student loans after losing a court battle.
• Students who borrowed loans to attend schools that shuttered between May 2013 and December 2018 can expect to see their debt erased soon.
• DeVos has been a critic of the Obama-era policy that erased debt for those who attended shuttered schools that violated the law or misled students.

The Department of Education will cancel $150 million in student loans after losing a court battle against an Obama-era borrower defense relief program that allowed people a chance to seek debt forgiveness if their schools shut down and violated the law or misled students. Education Secretary Betsy DeVos has been highly critical of the program, which she described in the past as giving students "free money."

In a statement, the Department said it has identified nearly 15,000 borrowers who are eligible to have their debt forgiven based on their attendance at a school that closed between November 1, 2013, and December 4, 2018. Around half of these borrowers, the Department said, had attended Corinthian Colleges, Inc. - a for-profit education company that shut down in April 2015.

The Department will begin notifying eligible borrowers about their debt forgiveness on December 14. It should take around 30 to 90 days for the company handling their student loans to complete the cancellation process, though the department noted that some cases might take longer.

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DeVos, who in May effectively killed a government team that investigated for-profit colleges, wanted to see the borrower relief program terminated. Democrats took her to court after she announced in June 2017 that she would pause the program.

After the loan cancellation was announced, Washington Democratic Sen. Patty Murray said, "this is a good first step, but it's not good enough."

"It's disappointing that it took a court order to get Secretary DeVos to begin providing debt relief to students left in the lurch by predatory for-profit colleges, but I am pleased the Department has finally started implementing this rule," Murray said in a statement. "I call on Secretary DeVos to abandon her attempts to rewrite the borrower defense rule to let for-profit colleges off the hook and instead fully implement the current rule and provide relief to more than 100,000 borrowers who were cheated out of their education and savings."