First on CNN: Biden administration makes it easier for borrowers misled by for-profit colleges to apply for student loan forgiveness
By Katie Lobosco, CNN
The Biden administration is making it a little easier for borrowers who were misled by their for-profit college to apply for student loan forgiveness. This comes as the president’s broader, separate plan to cancel up to $20,000 in student debt is held up in the courts.
The Department of Education launched a new webpage this week, providing clearer instructions for people seeking debt forgiveness under a program called borrower defense to repayment.
Borrowers who have been misled by their college have long had the right to request loan forgiveness, but the application process wasn’t clearly established until the Obama administration. Now, the department’s Federal Student Aid office is offering more comprehensive information about how to apply.
“The new borrower defense webpage is filled with guiding language and tips to help borrowers successfully complete their applications and get the loan relief to which they are entitled,” said Richard Cordray, Federal Student Aid’s chief operating officer, in a statement sent to CNN.
“For all those who lost time, money, and the promise of an education, we will continue to work to make them whole,” Cordray added.
Many students who have received forgiveness under the borrower defense program have been misled by for-profit colleges, like Corinthian Colleges, ITT Technical Institute and Marinello Schools of Beauty — to name a few. But a borrower is not required to attend a for-profit school to qualify.
The government has found that some students at those schools were misled or lied to about something that was central to their decision to enroll. Some schools provided inflated job placement numbers for graduates, for example.
If the Department of Education approves a borrower defense application, the remaining federal student debt the applicant has from attending the school will be canceled.
Under President Joe Biden, the agency has made progress in whittling down a backlog of borrower defense claims that built up during the Trump administration.
At one point, more than 200,000 borrower defense claims were pending. Former Education Secretary Betsy DeVos made it clear that she thought the rule was “bad policy” that puts taxpayers on the hook for the cost of the debt relief without the right safeguards in place and made changes to limit its reach.
Since Biden took office, the Department of Education has canceled approximately $14.5 billion under the borrower defense program for nearly 1.1 million borrowers.
In June, the Biden administration authorized the cancellation of an estimated $6 billion in federal student loan debt for about 200,000 borrowers as part of an agreement to settle a class action lawsuit filed in 2019 over the department’s handling of borrower defense claims. Many of the borrowers affected by the agreement have been waiting years for the Department of Education to process their claims.
But the debt cancellation is currently on hold after several schools appealed the judge’s decision in January.
The borrower defense program is one of several that offer student debt relief to targeted groups of people. Another, for example, cancels student loans for public sector workers after they have made 120 qualifying payments.
Separately, the Biden administration wants to issue a one-time student loan cancellation of up to $20,000 for low- and middle-income borrowers. But that program is facing several legal challenges and is currently on hold. The Supreme Court is scheduled to hear arguments in two related cases on February 28. A decision is expected by the summer.
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