Bad Student Loans to Get Full Forgiveness – Courthouse News Service
The new blanket relief policy could write off up to $ 1 billion in loans related to misleading advertising from for-profit schools.
WASHINGTON (CN) – The Biden administration on Thursday announced it would upgrade the last administration’s policy of providing only partial loan relief to defrauded students.
Now under the leadership of Secretary Miguel Cardona, the Education Ministry is set to cancel up to $ 1 billion in loans for around 72,000 borrowers who have already received partial repayments from its predecessor Betsy Devos.
“Borrowers deserve a streamlined and fair path to relief when they have been harmed by the fault of their institution,” Cardona said in a statement. “Careful examination of these claims and the associated evidence has shown that these borrowers have been wronged, and we will give them a fresh start from their debt.”
the ad is one that was long overdue since former President Barack Obama’s Justice Department cracked down on the for-profit school sector.
After the federal investigation led to the collapse of for-profit education chains like the ITT Technical Institute and Corinthian Colleges, students claimed that schools’ lies about job prospects after graduation. of the diploma had triggered what is known as the borrower’s defense against repayment – essentially guaranteed loan approval for people with bad credit.
With Devos in power, however, the education department first suspended the processing of these requests in 2017 and then reformulated the process for handling them.
Under the new sliding scale methodology, regulators used a complex formula to measure the median salary of graduates of fraudulent for-profit colleges against the median salaries of graduates of similar schools.
If graduates’ incomes were in deficit, they would be entitled to relief. Congress tried to block DeVos’ changes, but in the end, the House did not have enough votes to overcome that of President Donald Trump. veto.
In a call with reporters, an agency official noted Thursday that the ministry is still reviewing a backlog of claims that have yet to be decided, as well as those that have already been denied. The ministry also said it would continue to seek to rewrite the rules governing borrower protection.
The Trump administration’s announcement to suspend applications in 2017 sparked a class action on behalf of more than 160,000 students “in doubt” – they said their loans damaged their credit and made any form of financial security impossible. Under a settlement in April 2020 With the Education Department, students alleging fraud by for-profit colleges were promised rulings on their requests for debt relief within 18 months.
Twenty-two states and the District of Columbia also sued DeVos in July 2020 on his rule changes. the trial was headed in part by former California Attorney General Xavier Becerra, who was confirmed Thursday as Biden’s health secretary.