The Biden administration announced on Friday that it will forgive $1.2 billion in student debt for over 150,000 borrowers who were defrauded by for-profit colleges. This is the latest action by the Department of Education to provide relief to student loan borrowers who were misled by their schools about the quality of education, job prospects, or transfer credits.
Who Will Benefit from Student Debt Forgiveness?
The debt forgiveness will benefit over 150,000 borrowers who attended schools operated by ITT Technical Institute, Corinthian Colleges, and American Career Institute. These schools closed down in recent years after facing lawsuits and investigations for fraud and misconduct. The borrowers will have their loans discharged under the borrower defense to repayment rule, which allows students to seek relief if their schools engaged in deceptive or illegal practices.
What Does This Mean for Student Loan Borrowers?
The debt forgiveness means that the eligible borrowers will have their federal student loans canceled and will receive refunds for any payments they made on those loans. They will also have their credit reports cleared of any negative information related to those loans. The Department of Education will notify the borrowers by email or mail in the coming weeks about their eligibility and the next steps to receive the relief.
Impact of Bidenâs Action on Student Debt
The Biden administrationâs action on student debt is part of its broader effort to address the student debt crisis that affects nearly 45 million Americans who owe over $1.7 trillion in student loans. Since taking office, President Biden has extended the pause on student loan payments and interest until May 2022, canceled $9.5 billion in student debt for over 563,000 borrowers, and expanded the income-driven repayment and public service loan forgiveness programs.
The administration has also signaled its support for canceling $10,000 in student debt for all borrowers, but has not taken any executive action on that proposal yet. Instead, it has asked the Department of Justice and the Department of Education to review its legal authority to do so. Some Democrats in Congress have urged Biden to cancel up to $50,000 in student debt per borrower, arguing that it would stimulate the economy, reduce racial inequality, and help millions of Americans.
Conclusion
The Biden administrationâs decision to forgive $1.2 billion in student debt for over 150,000 borrowers is a welcome relief for those who were victimized by predatory for-profit colleges. It is also a significant step in addressing the student debt crisis that burdens millions of Americans. However, many advocates and lawmakers are calling for more action from the administration and Congress to provide comprehensive and universal student debt relief.
