WASHINGTON (AP) – Students who were cheated by their colleges and received only partial relief from their federal loans could now see them completely canceled, the Biden administration announced Thursday, reversing the school’s policy. Trump administration.
The change could lead to the cancellation of $ 1 billion in loans for 72,000 borrowers, all of whom attended for-profit schools, the Department of Education said.
“Borrowers deserve a simplified and fair path to relief when they have been harmed by the misconduct of their institution,” said Education Secretary Miguel Cardona. “A detailed review of these claims and the associated evidence showed that these borrowers have been harmed and we will grant them a fresh start on their debt.”
The department said it was overturning the formula used by the Trump administration to determine partial relief and establishing “a rational path to receiving full loan discharges.”
The decision applies to students who have already approved their claims and received only partial relief, the department said.
A reporter reporting from a senior department official said the agency was continuing to review both the backlog of pending decisions and those that have been denied.
The department described Thursday’s action as “a first step” and said it would be about rewriting regulations along the way.
In addition to canceling their loans altogether, students will repay the payments made on the loans and their eligibility for federal student aid will be restored. The department said it would also ask credit bureaus to remove negative loan-related ratings.
“Abandoning partial relief is a strong start for a narrow subset of borrowers, but what we need from the Department of Education is a review of the current borrower advocacy process,” said Toby Merrill, Project Director on predatory student loans, which represents students from for-profit colleges.
“The previous administration turned the defense of borrowers into a total farce that was prepared to deny claims without any real consideration,” Merrill said. “The Biden-Harris administration must now fix these flaws or perpetuate a system that is accompanied by the same students they are supposed to protect.”
College and Universities Education College, an industry pressure group, said it had no comment on the actions of the Biden administration.
Borrowers ’advocacy and repayment program allows students to cancel their federal loans if their colleges defrauded them. The Obama administration had expanded the program to help students attending for-profit colleges. But President Donald Trump’s education secretary, Betsy DeVos, withdrew it, saying it had become too easy for students to cancel their loans, and revised the program to make it harder for them to get help, including only partial cancellation of loans.
Congress voted to repeal the DeVos changes last March, but was vetoed by Trump.
Nearly two dozen state attorneys general had sued the Trump administration on its implementation of the borrower repayment defense program, which allows borrowers to cancel their loans if their colleges filed false claims to get them to sign up. One of the plaintiffs in that lawsuit was California Attorney General Xavier Becerra, who was confirmed Thursday as Secretary of Health for President Joe Biden.
The lawsuit, filed last July, argued that DeVos had changed the policy without justification, did not provide a meaningful process for students to forgive their loans, and created “arbitrary impediments” to them, including forcing them to -to prove to them that their schools knowingly deceived them.
Senator Patty Murray, who heads the Senate committee overseeing education, said DeVos used “faulty math” to deny total relief to students. Representative Bobby Scott, chairman of the House Education and Work Committee, described it as “a meaningless formula.”
“This announcement changes the lives of tens of thousands of people across the country,” Scott said.