WASHINGTON (AP) – Students who were defrauded by their colleges and received only partial relief from their federal loans can now see them canceled altogether, the Biden administration announced on Thursday, reversing a Trump administration policy.
The move could lead to the cancellation of $ 1 billion in loans to 72,000 borrowers, all of whom attended for-profit schools, the Department of Education said.
“Borrowers deserve a simplified and fair way of relief when they are harmed by their institution’s misconduct,” said Education Secretary Miguel Cardona. “A detailed analysis of these claims and the associated evidence has shown that these borrowers have been harmed and we are going to give them a fresh start on their debts.”
The department said it was rescinding the formula used by the Trump administration to determine partial relief and establishing “a simplified way to receive full repayment of the loan”.
The decision applies to students who have already had their claims approved and received only partial remission, the department said.
A senior official in the reporters department said the agency continues to review both the backlog of complaints that have not yet been resolved and those that have been denied.
The department described Thursday’s action as “a first step” and said it would rewrite the regulations in the future.
In addition to having their loans fully canceled, students will be reimbursed for any payments made on the loans and will have their eligibility for federal student aid reinstated. The department said it would also ask credit bureaus to remove any negative ratings linked to loans.
“Abandoning partial relief is a good start for a restricted subset of borrowers, but what we need from the Department of Education is a review of the current borrower’s defense process,” said Toby Merrill, director of the Predatory Student Loan Project, which represents former students at for-profit colleges.
“The previous government turned the borrower’s defense into a total scam that was manipulated to deny claims without any real consideration,” said Merrill. “The Biden-Harris administration must now resolve these shortcomings or else perpetuate a system that opposes the very students they are supposed to protect.”
Career education colleges and universities, an industry lobbying group, said they did not comment on the actions of the Biden government.
The borrower’s repayment defense program allows students to have their federal loans canceled if they are defrauded by their colleges. The Obama administration has expanded the program to help students attending for-profit colleges. But President Donald Trump’s education secretary, Betsy DeVos, pulled back, saying it was very easy for students to have their loans canceled, and revised the program to make it more difficult for them to obtain relief, including only partial cancellation of loans.
Congress voted to overturn DeVos’ changes last March, but was vetoed by Trump.
Nearly two dozen state attorney generals sued the Trump administration on implementing the borrower’s defense of the repayment program, which allows borrowers to have their loans canceled if their faculties make false claims for them to apply. One of the plaintiffs in that lawsuit was California Attorney General Xavier Becerra, who was confirmed on Thursday as health secretary to President Joe Biden.
The lawsuit, which was filed last July, argued that DeVos changed the policy without justification, failed to provide a meaningful process for students to forgive their loans and created “arbitrary impediments” for them, including forcing them to prove that their schools consciously deceived them.
Deputy Bobby Scott, chairman of the House’s Education and Work Committee, said that DeVos used an “absurd formula” to calculate the relief and that Thursday’s action would be “life changing for tens of thousands of people across the country”.