Today the Department of Education announced that it is providing $ 55.6 million in debt relief for students … [+]
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Today the Department of Education announced that it has approved more than 1,800 loan waiver applications for student borrowers who have attended three different schools. Borrowers will pay off 100 percent of their loans and receive approximately $ 55.6 million in debt relief.
The Biden administration uses the Borrower Defense Until Repayment rule, also known as the Borrower Defense, to provide this forgiveness. Under the Higher Education Act, the Minister of Education has the power to pay the debts of borrowers who have been defrauded or lied to by their college or university.
The Borrower Defense Ordinance is an important tool for the department to protect borrowers from repaying debts that should be canceled due to actions by predatory colleges. The ordinance directs the education minister to pay federal student loan debt in cases of college misconduct. Although the ordinance has existed since 1994 and the borrower’s right to defense has since been inscribed on every federal direct borrower’s note loan, its growing use was catalyzed by a single catastrophic event: the collapse of Corinthian Colleges, Inc., a large for-profit college. Chain with a history of fraud and wrongdoing towards its students.
The colleges named in today’s announcement were Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute. Each of these schools has a troubling history, and all of them are for-profit colleges.
According to the Department, Westwood College has made “widespread demonstrations of students’ ability to earn credits.” In addition, the college made “widespread, material misrepresentations” about the quality and career prospects of its criminal justice programs, a joint program in for-profit colleges, as they shifted from their historical foundation in technical education to more traditional college programs. (Read more about it in Lower Ed by Tressie McMillin Cottom, PhD.) Westwood accounts for the vast majority of the approved applications, resulting in approximately $ 53 million in debt relief and 1,600 applications.
The department had similarly troubling results for Marinello Schools of Beauty from 2009 until its closure in 2016. The department found that the cosmetics school left students without a teacher for weeks or months without the students having the proper education to do pass the license exams. More than 200 claims have been approved with approximately $ 2.2 million in loan termination. At least three students at the for-profit college received loan relief after a 2018 lawsuit against the department headed by then-secretary Betsy DeVos for falsely certifying student eligibility.
Marinello Schools of Beauty was sued under the False Claims Act in 2013 and settled the lawsuit with the Justice Department for more than $ 8.6 million in 2016. After denying its recertification for participation in state student aid programs, the department failed to survive due to its reliance on students who use state student loans and grants to fund their education. According to the settlement press release, the US Attorney for the Southern District of California said the school “manipulated the system to fraudulently secure student grants without which the school could not function.”
Finally, there is the Court Reporting Institute. The ministry found that from 1998 until it closed in 2006, the school incorrectly stated the time it would take to complete the court reporting program, resulting in very few students completing the program. Less than six percent of students actually graduated, and the few who did it took much longer to find out. The Court Reporting Institute made up a small portion of the remission, with 18 claims and approximately $ 340,000 in student debt relief.
Today’s announcement comes after several efforts by the ministry under President Joe Biden and Minister Miguel Cardona to help borrowers. According to the press release, the Biden administration canceled more than $ 1.5 billion, or nearly 92,000 borrowers. In March, the department streamlined the borrower defense process, which would help an estimated 72,000 borrowers obtain $ 1 billion in debt relief. Secretary of State Cardona approved $ 500 million debt relief to 18,000 borrowers who attended the now defunct ITT Technical Institute.
In addition, the ministry announced that it is facilitating the recruitment process for student borrowers with a complete and permanent disability. And it has stopped collections for defaulting borrowers under the old bank-based system who are not eligible for the federal student loan payment hiatus.
The ministry has proposed re-regulating borrower protection, in addition to other areas related to student loans and higher education in general. Many believe that a new rule is needed after it was changed under Minister DeVos, making it much harder for scammed borrowers to get relief. More is expected in the fall.
source https://collegeeducationnewsllc.com/biden-education-department-approves-student-loan-cancellation-for-more-than-1800-defrauded-borrowers/
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