The Biden administration has so far approved over $22 billion in student loan forgiveness for borrowers who were harmed by school misconduct. And the Education Department just announced a new round of discharges, indicating that relief is ongoing.
Here’s a breakdown.
1.3 Million Defrauded Borrowers Receive Billions In Student Loan Forgiveness
Nearly 1.3 million borrowers defrauded by their schools have collectively received $22 billion in student loan forgiveness, according to data released by the Education Department last week. Eligible borrowers include those were were “cheated by their schools, saw their schools precipitously close, or are covered by related court settlements,” according to the department’s statement.
The Biden administration previously had approved group discharges for hundreds of thousands of borrowers who attended now-defunct Corinthian Colleges and ITT Technical Institutes. These were national, for-profit college chains that collapsed after state and federal investigations suggested the schools made widespread misrepresentations to prospective students about admissions selectivity and students’ career and earnings prospects.
The Education Department is also currently implementing $6 billion in student loan forgiveness under a sweeping settlement agreement to resolve Sweet v. Cardona, a class action lawsuit alleging that department officials mishandled hundreds of thousands of Borrower Defense to Repayment applications. The Borrower Defense program allows borrowers who were misled or defrauded by their school to request federal student loan forgiveness. Over 100,000 borrowers have been flagged for discharge approval so far, with more coming. Recently, the legal organization representing the Sweet class accused a major national loan servicer of potentially violating the settlement agreement.
Biden Administration Announces Another $37 Million In Student Loan Forgiveness
This week, the Biden administration announced a new round of student loan forgiveness for defrauded borrowers.
Over 1,200 former students of the University of Phoenix will receive $37 million in student loan forgiveness, according to an Education Department announcement. The department, relying on findings from a multi-year investigation by the Federal Trade Commission, accused the school of engaging in widespread misrepresentations about students’ employment prospects and the school’s relationship with employers between 2012 and 2014.
“The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll,” said Federal Student Aid Chief Operating Officer Richard Cordray in a statement on Wednesday. “Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees. Today’s announcement builds on the FTC’s work to provide relief to those affected by Phoenix’s misconduct and delivers on the Biden-Harris Administration’s mission to support student loan borrowers.”
Qualifying borrowers must have “enrolled at the University of Phoenix between Sept. 21, 2012, and Dec. 31, 2014, and applied for relief” under the Borrower Defense to Repayment program, according to the department statement.
“The Department will notify affected borrowers by early October that their applications have been approved,” says the department. “These borrowers will see any remaining loan balances zeroed out and credit trade lines deleted. Any payments they made to the Department on their related Federal student loans will be refunded.”
Education Department Encourages Defrauded Borrowers To Apply For Student Loan Forgiveness
The Education Department has encouraged borrowers who have been misled or defrauded by their school to apply for student loan forgiveness through the Borrower Defense program.
“Borrowers who may qualify for relief because they have been affected by this finding can visit StudentAid.gov/borrower-defense to learn how to apply for borrower defense,” said the department in its statement on Wednesday. The Biden administration recently issued detailed guidance for borrowers designed to help strengthen Borrower Defense applications and increase the chances of being approved for student loan forgiveness.
The administration also enacted new Borrower Defense regulations in July. The new rules broaden the definition of school misconduct that can be the basis for Borrower Defense relief, and they make it easier for the Secretary of Education to approve group discharges. However, the new regulations were blocked by a federal appeals court earlier this summer, leaving their future in doubt.