Students who have obtained partial loan relief to obtain full release


Students who were swindled by their colleges and received only partial relief on their federal loans could now see them fully canceled, the Biden administration said Thursday, reversing a Trump administration policy.

WASHINGTON (AP) – Thousands of students swindled by for-profit schools will have their federal loans wiped out entirely, the Biden administration said Thursday, reversing a Trump administration policy that had given them only partial relief .

The change could result in the cancellation of $ 1 billion in loans for 72,000 borrowers, all of whom attended for-profit schools, the education ministry said.

“Borrowers deserve a simplified and fair remedy when they have been harmed by the bad conduct of their institution,” said Education Secretary Miguel Cardona. “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 on their debt.”

The department said it was rescinding the formula used by the Trump administration to determine partial relief and putting in place “a streamlined path to get full loan discharge.”

The ruling applies to students who have already had their applications approved and received only partial relief, the department said.

A senior ministry official told reporters the agency continued to review both the backlog of pending claims and those that were denied.

The ministry called Thursday’s action a “first step” and said it would consider rewriting the regulations later.

The Borrower Against Repayment Defense program allows students to have their federal loans canceled if they have been defrauded by their schools. The Obama administration had expanded the program to help students attending for-profit colleges like Corinthian and ITT Technical Institute, which have closed. But President Donald Trump’s Education Secretary Betsy DeVos withdrew it, saying it had become too easy for students to write off their loans, and revised the curriculum to make it harder for them. obtain relief, in particular by providing for only partial cancellation of loans. .

Congress voted to reverse DeVos’ changes last March, but Trump vetoed it.

The Education Ministry said a total of 343,331 requests for borrower’s defense relief had been received as of February 28. Of these, 61,511 had been approved and borrowers notified. Most of the rest had been declared ineligible or were still pending.

In addition to seeing their loans fully canceled, the Biden administration said students who had received only partial scholarships would be reimbursed for any payments made on the loans and their eligibility for federal student aid would be reinstated. The department said it will also ask credit bureaus to remove any negative ratings related to loans.

“Giving up partial relief is a good start for a small subset of borrowers, but what we need from the Department of Education is an overhaul of the current borrower advocacy process,” said Toby Merrill, director of the Project on Predatory Student Lending, which represents former students at for-profit colleges.

“The previous administration turned the borrower’s defense into a total sham that was rigged to deny claims without any real consideration,” Merrill said. “The Biden-Harris administration must now either remedy these failures or else perpetuate a system that is stacked against the very students they are meant to protect.”

Career Education Colleges and Universities, an industry lobby group, said it had no comment on the actions of the Biden administration.

Congress voted to reverse DeVos’ changes last March, but Trump vetoed it.

Nearly two dozen state attorneys general had sued the Trump administration over its implementation of the borrower’s defense against repayment program, which allows borrowers to have their loans canceled if their colleges make false statements to get them to register. One of the plaintiffs in that lawsuit was California Attorney General Xavier Becerra, who was confirmed Thursday as President Joe Biden’s health secretary.

The lawsuit, which was filed last July, argued that DeVos changed the policy without justification, failed to provide a meaningful process for students to get their loans canceled, and created “arbitrary barriers” for them. , including requiring them to prove that their schools knowingly misled them.

Senator Patty Murray, who heads the Senate committee overseeing education, said DeVos used “wrong math” to deny students complete relief. Rep. Bobby Scott, chairman of the House Education and Work Committee, called it an “absurd formula.”

“This announcement is changing the lives of tens of thousands of people across the country,” Scott said.

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