Ms. DeVos’s actions are “a slap in the face of students across the country,” a group of students who attended now-closed for-profit schools said in a letter sent to the secretary on Tuesday.

“Student voices have not been involved in the process,” they wrote. “Meanwhile, the for-profit college industry had seats at the table every step of the way.”

The department announced its policy change the same day the Federal Trade Commission unveiled a $191 million settlement with the University of Phoenix, which became the latest in a series of for-profit schools to be penalized for misleading students. The commission’s announcement pointedly noted that students who felt they had been deceived by the school could seek to have their federal loans wiped out through the borrower-defense program.

The program dates back to the mid-1990s but was little used until a rash of for-profit chain collapses — starting with Corinthian Colleges in 2015 — flooded the Education Department with claims. The education secretary at the time, Arne Duncan, said his department would use the borrower-defense system to eliminate Corinthian students’ debts.

The Obama administration approved debt elimination for about 32,000 students at Corinthian and two other schools, but the process dragged for others. When President Trump took office in 2017, most Corinthian students were still waiting for the promised relief.

Ms. DeVos, who called the plan a “free money” giveaway, soon imposed a partial-relief approach, based on student income. To discover how much applicants earned, the Education Department shared their personal details with the Social Security Administration.

A federal magistrate in San Francisco found that the policy violated the Privacy Act, a decision that the Education Department has appealed. The magistrate, Sallie Kim, recently held Ms. DeVos in contempt of court for illegally billing nearly 46,000 Corinthian borrowers whose loans are supposed to be frozen until their case is resolved.