New Documents Show Department of Education Froze Tool to Help Defrauded Student Borrowers

Documents Released as Federal Court Strikes Down Borrower Defense Settlement

WASHINGTON —Today, Rep. Robert C. “Bobby” Scott, the Chairman of the Committee on Education and Labor, and Rep. Carolyn B. Maloney, the Chairwoman of the Committee on Oversight and Reform, released new documents detailing how the Department of Education froze a tool designed to ease the Borrower Defense application process for borrowers who were ripped off by their schools, typically for-profit colleges.  

“We are deeply troubled that the Department of Education halted a web tool to help simplify and streamline the process for defrauded students applying for relief,” said the Chairs.  “Last week, a federal court found that the Department denied 94% of Borrower Defense applicants and that the Department’s form denial letters put borrowers in ‘worse positions’ and ‘hangs borrowers out to dry.’  Today, we are releasing further evidence that the Department of Education continues to undermine and harm these defrauded students at every turn.  Regrettably, the Department lacks any credibility to carry out this program fairly for these borrowers and their families.”

According to documents obtained by the Committees, on May 21, 2020, the Office of Federal Student Aid (FSA) ordered all work on the Borrower Defense web tool to stop.  An FSA program manager wrote that “FSA has made the decision to delay the implementation” and that “all work on borrower defense … should stop for now.”  On May 26, 2020, an FSA contracting officer followedup to “memorialize” the stop work order.  

These documents directly contradict vehement and public denials from the Department of Education.  For example, on June 23, 2020, a Department spokesperson stated, “Anyone who says that there has been any effort by anyone at the Department to delay or obstruct the development of a new borrower defense form or website is lying.”  

On that same day, a press report revealed that a whistleblower filed two complaints with the Department of Education’s Inspector General raising concerns about interference with FSA’s independent activities and that Principal Deputy Undersecretary Diane Auer Jones was “effectively killing” the web tool by preventing its launch.  According to the whistleblower, Jones halted the web tool because it was “too user-friendly and would have helped too many borrowers complete the application correctly, without any disqualifying mistakes.”

After the whistleblower’s complaints became public, the Department immediately took steps to restart work on the web tool.  According to an email obtained by the Committees, on June 30, 2020, the Department sent a request for proposal to the contractor and on July 1, 2020, the Department agreed to proceed with a redesigned web tool.  However, in response to a press report covering the Department’s decision to restart work, the Department claimed that the tool was never blocked, stating:  “There has been no reversal on this at all. … There can’t be a ‘reversal’ on a decision that was never made.”

According to a contract modification document, the redesigned web tool will cost the Department more than $1 million to develop and implement and will not be ready until at least November.  The cost of the redesigned web tool raises concerns about the Department of Education’s stewardship of taxpayer funds.  The delayed launch may also harm students because the web tool will not be ready until months after the Department’s new Borrower Defense rules went into effect in July.

Click here to read the new documents.



Press Contact

Aryele Bradford (Oversight and Reform):  (202) 226-5181

Stephanie Lalle (Education and Labor):  (202) 226-0853