72,000 Borrowers Will Get $1 Billion In Student Loan Forgiveness

WILMINGTON, DE – DECEMBER 23: Miguel Cardona speaks after President-elect Joe Biden announced him as … [+] his nomination for Secretary of Education at the Queen Theater on December 23, 2020 in Wilmington, Delaware. Connecticut’s education officer Cardona faces an urgent task to safely reopen schools during the COVID-19 pandemic. (Photo by Joshua Roberts / Getty Images)

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The U.S. Department of Education announced Thursday that tens of thousands of student borrowers defrauded by their schools will receive a total of $ 1 billion in student loan waivers.

The relief is granted for repayment under the troubled borrower defense program. The Obama administration enacted this loan forgiveness program in 2016 to provide student debt forgiveness to students misled, defrauded, or otherwise harmed by predatory colleges and universities – often for profit schools -.

However, under former Minister of Education Betsy DeVos, the Department of Education has rewritten the rules for the Borrower Defense Program. New regulations, which came into effect on July 1, 2020, significantly weakened the borrower defense relief for student loan borrowers and increased the burden of proof to enforce. The department also introduced a controversial new policy that grants partial (rather than full) student loan waivers for approved BorrowerDefense applications.

Education Minister Miguel Cardona, who was recently confirmed replacing DeVos, announced the ministry’s change in policy on borrower defense requests. Borrowers are now entitled to a full student loan waiver, along with refunds for payments already made and the removal of the associated negative credit reports.

“Borrowers deserve a simplified and fair way of relief when they have been harmed by the misconduct of their institution,” said Secretary of State Cardona in a statement. “A close examination of these claims and related evidence revealed that these borrowers have been harmed and we are giving them a fresh start on their debts.”

Importantly, the relief only applies to approximately 72,000 student loan borrowers who have attended for-profit schools that have already been approved by the Department of Education for borrower relief. It does not apply to the tens of thousands of additional student loan borrowers waiting for a decision or whose claims have previously been denied by the ministry. Eligible borrowers should be notified by the ministry in the coming weeks.

The policy change also does not affect a recent court ruling issued this week on the Borrowers Defense for Repayment Program. This decision largely confirmed the more stringent regulations put in place on the program under former Secretary DeVos, which add to the burden of proof required on student loan borrowers to approve their claims that borrowers must prove they have been financially harmed, and the definition of school-related misrepresentations.

To reverse these stricter regulations, the Biden government could potentially replace new, more borrower-friendly rules. However, this could be a lengthy process as new regulations comply with the Administrative Procedure Act and must include a significant public contribution. State Secretary Cardona has not explicitly indicated whether he will start drafting new regulations.

Alternatively, Congress could pass legislation that reverses the current rules and introduces a borrower defense regime that will make it easier for student loan borrowers to obtain relief. Congress passed such a bipartisan bill last year, but President Trump vetoed it. It is unclear whether the bill will be passed again at this meeting.

“Giving up partial relief is a good start for a small subset of borrowers,” Toby Merrill, director of the Student Predatory Loan Project, said in a statement. “But what we need from the Department of Education is a revision of the current borrower defense process … The previous government turned borrower defense into an outright sham, manipulated to deny claims without real deliberation. The Biden-Harris administration must now fix these shortcomings or maintain a system that is stacked against the very students they are supposed to protect. “

further reading

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source https://collegeeducationnewsllc.com/72000-borrowers-will-get-1-billion-in-student-loan-forgiveness/