On Thursday, the US Department of Education announced his new plan to help combat the debts of those who borrowed federal money to pay off student loans.
In a new simplification process, borrowers who have approved claims that confirm that their college or institution has defrauded them or engaged in financial misconduct will be able to request full relief.
The authorities estimate that this could help some 72,000 borrowers to receive $ 1 billion in loan cancellation.
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“Borrowers deserve a simplified and fair way of relief when they are harmed by the misconduct of their institution,” said Secretary of Education 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 grant them a fresh start on their debts.”
The Department of Education will replace the previous formula used to calculate relief – used by former Secretary of Education Betsy DeVos under the Trump administration – and will ensure that borrowers with verified claims against a U.S. school will have full forgiveness of the loan.
The current Department of Education stated that, after reviewing the formula used by the DeVos administration, “the Department determined that this did not result in an appropriate relief determination” for defrauded borrowers.
The Department of Education will grant eligible borrowers full relief from related federal student loans, reimburse the amounts paid on the loans, request credit agencies to remove negative reports associated with the loan, and reinstate eligibility for federal student aid.
This new approach is similar to the Borrower’s Defense, a legal warning that protects students who take loans against fraudulent schools and colleges. A department spokesman confirmed to The Hill that this was often used during the Obama administration, especially in cases related to complaints from Corinthian College students.
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