A federal judge is demanding answers after the U.S. Education Department rejected 94% of claims for student loan forgiveness it had agreed to process after being sued over delays.
U.S. District Judge William Alsup in California scrapped the settlement this week and is considering barring the agency from denying claims until the case is decided. Judge Alsup said the department has been denying claims using template letters that are “alarmingly curt.”
He said that although Education Secretary Betsy DeVos blamed the backlog on the hard work that goes into processing claims, she has now “charged out of the gate, issuing perfunctory denial notices utterly devoid of meaningful explanation at a blistering pace.”
The dispute stems from a 2019 lawsuit brought by 160,000 borrowers who say the Education Department illegally stalled their claims for loan relief.
The students claim they were defrauded by their schools.
The Education Department says many claims were submitted for ineligible programs or failed to make a case for loan relief.
In a proposed settlement in April, the Education Department agreed to process the backlog of claims within 18 months. But Alsup scrapped the deal, saying it was undermined by the recent spate of rejections.