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DeVos: Defrauded students may get only partial relief

Students who are cheated by their colleges will receive full loan forgiveness only if they end up earning far less than their peers, while others will receive relief between 25% and 75% of their debt under new rules unveiled Tuesday by the U.S. Education Department.

The policy is a departure from the Obama administration, which provided full loan forgiveness in cases of fraud, and it marks the second time the Trump administration has attempted to provide only partial loan relief. A federal court blocked a previous attempt in 2018 after it determined the Education Department violated privacy laws to gather income information.

Education Secretary Betsy DeVos said the new policy provides a fair resolution to the “mess” inherited from the previous administration.

“We cannot tolerate fraud in higher education, nor can we tolerate furiously giving away taxpayer money to those who have submitted a false claim or aren’t eligible for relief,” DeVos said in a statement.

The policy devises a new formula to determine how much federal debt students should have erased under the department’s Borrower Defense program. The Obama administration expanded the program in 2016 to forgive debt for thousands of students harmed by the Corinthian Colleges chain, which shut down following findings that it had lied to students about job placement rates.

Since then, thousands of other students have applied for loan forgiveness after saying they were cheated by their schools, mostly for-profit colleges. But DeVos has been reluctant to provide full relief. In a call with reporters Tuesday, her principal deputy under secretary said the forgiveness program had become a “backdoor” route to free college.

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