Biden's administration wrote off $ 1 billion in student debt to Americans - ForumDaily
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Biden's administration wrote off US $ 1 billion in student debt

The head of the education department in the Biden administration has canceled $ 1 billion in student loan debt for about 72 defrauded borrowers, reports Business Insider.

Photo: Shutterstock

While the student debt cancellation has not been completed for all Americans, debt accumulated by students who have been defrauded by commercial schools will be forgiven in the coming weeks.

Taking his first major step as head of the department of education, Miguel Cardona on March 18 completely changed the Trump-era policy, which brought only partial relief to deceived students. For-profit institutions that closed many years ago, such as Corinthian Colleges and ITT Technical Institutes, broke federal law by persuading their students to take out loans, and Cardona's new policy will help approximately 72 of these students cancel those debts.

According to the Department, eligible borrowers will begin receiving notifications over the next few weeks, followed by repayment of loans.

“Borrowers deserve a simplified and fair path to relief if they have been harmed by misconduct by their educational institution,” Cardona said in a statement. “A thorough review of these claims and related evidence shows that these borrowers have been harmed, and we will give them a fresh start.”

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The debt relief methodology developed by former head of education Betsy DeVos compared the average earnings of graduates with debt relief requirements to the average earnings of graduates in comparable programs, and the larger the difference, the more debt relief the candidate should have received. Cardona said the process did not lead to a proper decision on damages and should be canceled.

According to the press release, full debt relief under the new rules includes:

  • 100% repayment of federal student loans related to borrowers;
  • reimbursement of any amounts paid on loans, as appropriate;
  • requests to credit bureaus to remove any related negative credit reporting;
  • and, if applicable, reinstatement of eligibility for federal student aid.

In 2014, Corinthian Colleges, a for-profit company that enrolled students at more than 100 college campuses across the country, filed for bankruptcy after a series of investigations into defrauding students. The company made expensive private loans to students despite knowing in advance that most would default, and at its peak earned more than $500 million in Pell Grant money, according to the Senate document.

The Department of Education fined the company $ 30 million for misleading students.

Two years later, ITT Technical Institutes closed their doors after a series of fraudulent claims regarding loan payments, employment, wages and more.

As a result, in May, Senate Democrat Dick Durbin, along with other Democratic lawmakers, unveiled a plan to provide full student loan repayments to three categories of defrauded students as part of a COVID-19 relief package. The first two categories were for students attending Corinthian Colleges and ITT Technical Institutes.

“Borrowers have waited years for the Department to provide them with the relief to which they are legally entitled,” Durbin said in a statement. “These borrowers have difficulty finding work and are often unable to provide for themselves or their families. They are unable to be productive participants in the economy because of crippling debt and are often unable to complete their education because of pointless debt.”

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While debt relief for defrauded students was not included in the latest pandemic aid package, Durbin and other Democrats praised the Biden administration for providing this aid to affected students.

“For more than four years, defrauded borrowers and their families lived under the weight of student debt they never had to pay back,” Education and Labor Committee Chairman Bobby Scott said in a statement. “I applaud the Biden administration for doing the right thing, and I can only imagine the mixture of joy and relief they are feeling today.” This announcement is life-changing for tens of thousands of people across the country.”

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