Hello and welcome to Extra Credit, a look at the news through the lens of debt. After a hiatus for parental leave, I’m back and digging into who pays for schools’ alleged misconduct. The debate over expanding the benefits of the student loan program, including canceling loans, is often framed as a battle between taxpayers and borrowers. Provide help to borrowers, critics allege, and other Americans, who didn’t go to college or who already paid off their debt, will be on the hook.
But in many cases, there’s actually another entity that could pay for borrowers’ relief, advocates argue. The problem, they say, is that those entities almost never do. As of January 31 of this year, higher education institutions owed roughly $1.375 billion to the Department of Education, according to a report released Wednesday by the National Legal Student Defense Network, an organization founded by former Department of Education officials that does litigation and advocacy on behalf of student loan borrowers. That figure is up about $174 million from last year, when Student Defense first released a report tracking funds owed by institutions to the Department based on government records. The reasons the Department assessed liabilities against the schools varied; some may have closed and so the agency had to discharge the money enrolled students borrowed to attend, others perhaps overdrew from the government’s coffers or applied loan money to an ineligible student. But regardless of the reason the Department assessed a liability against a school, the reports uncovered little evidenc …