Education Department Quietly Forgives $18B in School Debt
Arit John, Los Angeles Times
After a modest start at the tail end of the Obama administration, the program stagnated under former President Donald Trump. But under President Joe Biden, the Education Department has ramped up processing borrower defense applications, overhauled the regulations governing the program and used it to cancel billions in debt for people who attended for-profit schools accused of defrauding students.
It's part of a broader strategy the Biden administration has used to offer debt relief to the borrowers struggling the most with their loans. At a time when Biden's plan to cancel up to $20,000 in debt for some borrowers is a nonstarter in Congress and at risk of being blocked by the Supreme Court, his administration has tried to bolster the existing web of programs, policies and regulations meant to protect student loan borrowers.
The Education Department has forgiven more than $18 billion for borrower defense applicants and people whose schools closed before they finished their degrees, including $5.8 billion for 560,000 Corinthian College students and $3.9 billion for 200,000 borrowers who were enrolled at ITT Technical Institutes
Court Allows Student Loan Forgiveness To Mostly Proceed Under Settlement After Challenge
A federal court will allow most student loan forgiveness and other debt relief under an approved settlement agreement involving the Borrower Defense to Repayment program to proceed, following a legal challenge to halt implementation. Borrowers had sought relief for years after alleging that they had been defrauded by their schools.
In November of last year, a federal judge approved a sweeping settlement agreement to resolve Sweet v. Cardona, a long-running class action lawsuit between thousands of federal student loan borrowers and the U.S. Department of Education. Borrowers had claimed that the department had stalled processing student loan discharge applications under Borrower Defense to Repayment, a federal program which can provide student loan cancellation and other debt relief for borrowers defrauded by their schools (i.e., through misrepresentations and other illegal conduct). The class of federal student loan borrowers had also claimed that the Education Department arbitrarily denied thousands of Borrower Defense applications with little or no meaningful review.
Under the approved settlement agreement, the Biden administration agreed to enact $6 billion in federal student loan discharges. Over 200,000 borrowers who submitted Borrower Defense applications before June 2022, and had attended one of several dozen institutions listed in settlement documents, would be eligible for loan cancellation. Class members would also be entitled to refunds of past payments on their associated federal student loans, as well as credit repair.
The agency has forgiven billions of dollars in student loans for borrowers whose schools closed before they finished their degrees, as part of an Obama-era program. Biden’s debt relief plan still awaits a decision from the Supreme Court.
March 6, 2023 •Arit John, Los Angeles Times
After a modest start at the tail end of the Obama administration, the program stagnated under former President Donald Trump. But under President Joe Biden, the Education Department has ramped up processing borrower defense applications, overhauled the regulations governing the program and used it to cancel billions in debt for people who attended for-profit schools accused of defrauding students.
It's part of a broader strategy the Biden administration has used to offer debt relief to the borrowers struggling the most with their loans. At a time when Biden's plan to cancel up to $20,000 in debt for some borrowers is a nonstarter in Congress and at risk of being blocked by the Supreme Court, his administration has tried to bolster the existing web of programs, policies and regulations meant to protect student loan borrowers.
The Education Department has forgiven more than $18 billion for borrower defense applicants and people whose schools closed before they finished their degrees, including $5.8 billion for 560,000 Corinthian College students and $3.9 billion for 200,000 borrowers who were enrolled at ITT Technical Institutes
Court Allows Student Loan Forgiveness To Mostly Proceed Under Settlement After Challenge
A federal court will allow most student loan forgiveness and other debt relief under an approved settlement agreement involving the Borrower Defense to Repayment program to proceed, following a legal challenge to halt implementation. Borrowers had sought relief for years after alleging that they had been defrauded by their schools.
In November of last year, a federal judge approved a sweeping settlement agreement to resolve Sweet v. Cardona, a long-running class action lawsuit between thousands of federal student loan borrowers and the U.S. Department of Education. Borrowers had claimed that the department had stalled processing student loan discharge applications under Borrower Defense to Repayment, a federal program which can provide student loan cancellation and other debt relief for borrowers defrauded by their schools (i.e., through misrepresentations and other illegal conduct). The class of federal student loan borrowers had also claimed that the Education Department arbitrarily denied thousands of Borrower Defense applications with little or no meaningful review.
Under the approved settlement agreement, the Biden administration agreed to enact $6 billion in federal student loan discharges. Over 200,000 borrowers who submitted Borrower Defense applications before June 2022, and had attended one of several dozen institutions listed in settlement documents, would be eligible for loan cancellation. Class members would also be entitled to refunds of past payments on their associated federal student loans, as well as credit repair.
