WASHINGTON (AP) – Students who were deceived by their colleges and received only partial relief from their federal loans could now see that they have been fully canceled, Biden’s government announced Thursday, reversing a Trump administration policy.
The change could lead to the cancellation of $ 1 billion in loans to 72,000 borrowers, all of whom attended for-profit schools, the education department said.
“Lenders deserve a simplified and fair way to relief if they are harmed by the misconduct of their institution,” Education Minister Miguel Cardona said. “A careful review of these claims and the accompanying evidence has shown that borrowers have been disadvantaged, and we will give them a fresh start on their debt.”
The department said it had repealed the formula used by the Trump administration to provide partial relief and “set a streamlined path to full lending”.
The decision applies to students who have already approved their claims and received only partial relief, the department said.
According to a senior official reporter for the department, the agency has continued to review the overdue claims yet to be decided, as well as the denial.
The department described Thursday’s actions as a first step and said it would look at rewriting the regulations.
In addition to having their loans canceled in full, students will also receive the reimbursement for all payments made on the loans, and will again be eligible for federal student aid. The department said it would also ask credit bureaus to remove negative ratings related to the loans.
“Leaving partial relief is a strong start for a close-knit group of borrowers, but what we need from the Department of Education is a review of the current loan defense process,” said Toby Merrill, director of the Project on Predatory Student Lending, which former students at colleges for profit.
“The previous government turned the borrower’s defense into a total scam that could have denied the claims without any real consideration,” Merrill said. “The Biden-Harris administration must now address these shortcomings, otherwise they must maintain a system against the students they have to protect.”
Career Education Colleges and Universities, an industry lobbying group, said they had no comment on the Biden government’s actions.
The borrower’s defense and repayment program allows students to cancel their federal loans if they are cheated by their colleagues. The Obama administration has expanded the program to help students who attended for-profit colleges. But President Donald Trump’s secretary of education, Betsy DeVos, has withdrawnand said it had become too easy for students to cancel their loans, and revised the program to make it harder for them to get relief, including the partial cancellation of the loans.
Congress voted last March to block DeVos’ changes, but it was vetoed by Trump.
Nearly two dozen state attorneys have sued the Trump administration on implementing the loan repayment defense program, which enables borrowers to cancel their loans if their colleges make false claims to enroll them. One of the plaintiffs in the case was California Attorney General Xavier Becerra, who was confirmed as President Joe Biden’s health secretary on Thursday.
The lawsuit, filed in July last year, alleges that DeVos changed the policy without justification, failed to provide a meaningful process for students to have their loans forgiven, and created ‘arbitrary barriers’ to it. , including forcing them to prove that their schools are knowingly misleading them.
Rep. Bobby Scott, chairman of the House Committee on Education and Labor, said DeVos used a “nonsensical formula” to calculate relief and that the move on Thursday would be a life-changing move for tens of thousands of people across the country. ‘