The U.S. Department of Education on Wednesday announced that it had approved $415 million in new student loan forgiveness for borrowers defrauded by their schools.
“The Department remains committed to giving borrowers discharges when the evidence shows their college violated the law and standards,” said U.S. Secretary of Education Miguel Cardona in a statement. “Students count on their colleges to be truthful. Unfortunately, today’s findings show too many instances in which students were misled into loans at institutions or programs that could not deliver what they’d promised.”
Details on the latest wave of relief.
Student Loan Forgiveness Under Borrower Defense to Repayment
The student loan forgiveness announced today by the Biden administration is being provided under a federal loan discharge program called Borrower Defense to Repayment. That program wipes out the federal student loan debt for borrowers who were defrauded by their school (often, for-profit schools) through misrepresentations and other fraudulent conduct related to key aspects of the educational program such as admissions, transferability of credits, or career prospects.
For years, the Borrower Defense program has been has been mired in legal and political wrangling. The Obama administration first enacted regulations and procedures governing the relief program in 2016. But under former Education Secretary Betsy DeVos, the Education Department issued new rules that upended the program, increasing a borrower’s burden of proof and weakening the available relief. The Department also enacted a controversial “partial relief” policy, where the Department could provide little or no student loan cancellation even for claims it approved. These issues, as well as a massive backlog of unprocessed Borrower Defense applications, were the subject of multiple lawsuits brought in federal court.
Now, the Biden administration is engaging in new efforts to overhaul the Borrower Defense regulations to make it more borrower-friendly. In addition, the administration rescinded the DeVos-era “partial relief” policy, which will allow borrowers to receive complete student loan forgiveness for approved claims, along with refunds for payments already made. And the Education Department has been slowly working through the remaining backlog of tens of thousands of Borrower Defense applications, some of which have remained unprocessed for years.
According to the Education Department, the latest wave of $415 million in approved Borrower Defense claims will be distributed to 16,000 borrowers who attended specific for-profit educational institutions including DeVry University, Westwood College, and ITT Technical Institutes. The Department outlined its findings related to the schools’ alleged misconduct in a detailed statement.
The Department’s determinations against ITT in particular — which collapsed in 2016 following widespread allegations of misconduct — represents its fourth finding that the school lied to borrowers about key aspects of its program. A new report released this week by the Project on Predatory Student Lending revealed additional details about the school’s alleged practices including aggressive recruitment, widespread reliance on maxing out available student loan debt, and ineffective career placement services.
“Every student who attended ITT is a victim of its fraud and each one deserves justice,” said Eileen Connor, Director of the Project on Predatory Student Lending, in a statement on Wednesday accompanying the release of the report. “The cancellation of all remaining ITT debt is the only conscionable and reasonable course of action.”
The Department claims that with the latest wave of student loan cancellation, it has now approved approximately $2 billion in new Borrower Defense claims for more than 107,000 borrowers over the course of the last year.
How To Qualify For Student Loan Forgiveness Under Borrower Defense To Repayment
Borrowers who believe they may qualify for relief under today’s announcement should be notified in the coming weeks. In the meantime, the Department of Education has set up a website where borrowers can get updates.
The Borrower Defense to Repayment program remains active, and borrowers who believe they were defrauded by their school can still apply for relief. Borrowers can obtain application information through the Department’s Borrower Defense portal.
In its statement on Wednesday, the Department indicated that it “will continue to approve any applications it subsequently receives from borrowers who attended [these schools] during the period of demonstrated misconduct and that raise allegations that are supported by the evidence we have reviewed.”