Student loan debt: Education Department cancels $415 million for victims of fraud

This is the latest attempt by the Biden administration to cancel a student loan debt for borrowers who may already be eligible for debt relief but are still awaiting paperwork. The agency is reducing the backlog apology claims left by the Trump administration that were filed under a policy known as protecting the borrower to repay.
Under the leadership of US Secretary of Education Miguel Cardona, the department has canceled about $ 2 billion in claims to protect borrowers from more than 107,000 individuals.

“The department remains committed to giving borrowers statements if evidence shows that their college has violated the law and standards,” Cardona said in a statement.

The borrower’s protection policy allows students who have been deceived by their colleges to seek federal debt. The apology process was simplified during the Obama administration when major commercial colleges like the Corinthian Colleges and ITT Technical Institute closed.

But the department has stopped processing claims to protect borrowers for months under former Education Minister Betsy DeVos, who has made it clear that she believes the rule is a “bad policy” that puts taxpayers on the hook by easing debt-free debt. proper guarantees in place.

Former DeVry students get relief

Wednesday’s action is the first time the Department of Education has approved borrower protection requirements for an existing institution: the University of DeVry. The department estimates that approximately 1,800 former DeVry students are eligible for nearly $ 72 million. More borrowers could see relief as the department continues to review applications that are under consideration.

The Department of Education found that the University of DeVre misled prospective students from 2008 to 2015, falsely claiming that 90% of its graduates found work in their fields within six months of graduation – and making statistics a central element of the national advertising campaign. In fact, the employment rate at the institution was about 58%, according to the Department of Education. Former students who demonstrate in their defense of the borrower claim they are had relying on inflated statistics, may be eligible for relief.

The government will seek reimbursement for the cost of academic loan statements.

DeVree University spokeswoman Donna Sholts said in an email to CNN that “DeVry incorrectly characterizes DeVry’s calculation and disclosure of graduate results in certain advertisements, and we disagree with the conclusions they came to.”

She also noted that DeVry has a different board and leadership than between 2008 and 2015, and “has focused our entire organization on helping people compete in a complex and changing job market”.

The Department of Education has also announced new layoffs to protect borrowers for some alumni who have attended Westwood College, nursing programs at the ITT Institute of Technology, criminal justice programs at the Minnesota School of Business / Globe University, Corinthian Colleges and beauty schools. None of these institutions are currently operational.

More targeted debt relief

Under Cardona’s leadership, the Department of Education has now approved about $ 16 billion in federal student loans for more than 680,000 borrowers, including $ 2 billion in borrower protection.

It has cut $ 7.8 billion for more than 400,000 borrowers who are unable to work due to permanent disability. It reached out to borrowers who were already eligible for the benefit by automatically identifying them through the coincidence of data from the Social Security Administration.
The department has also revised its public service loan forgiveness program, which cancels outstanding federal student loan arrears for those working in the public sector after they have made payments for 10 years. The Biden administration has temporarily expanded the eligibility criteria so that they now apply to borrowers who have old loans that initially did not meet the requirements, as well as to those that were in the wrong repayment plan but met other requirements. These changes have resulted in an estimated debt of nearly $ 5 billion for 70,000 borrowers.

But the actions of the Department of Education for some advocates of borrowers do not come. There are still tens of thousands of claims to protect borrowers.

“This piecemeal approach hardly touches on the surface of President Biden’s backlog in borrowing protection,” Eileen Connor, director of the Predatory Student Lending Project, said Wednesday. The group represents the interests of borrowers in litigation due to unprocessed borrower protection requirements.

The Biden administration continues to be pressured by key Democrat lawmakers to offer more relief to student debt.

Senate Majority Leader Chuck Schumer of New York and Sen. Elizabeth Warren of Massachusetts have repeatedly called for Biden to use the executive branch to abolish a $ 50,000 student loan debt per borrower altogether. The president has so far resisted these calls, despite expressing support for Congress to abolish $ 10,000 for each borrower.

This was reported by representatives of the Department of Education has already canceled more student debts than any previous administration. He also extended the pandemic-related pause on federal student loan payments, which has been in effect since March 2020. It now ends on May 1st.


Leave a Comment