The U.S. Department of Education announced Thursday that it will streamline the process of determining eligibility for student loan forgiveness for borrowers with claims that their institutions engaged in misconduct.
The Department expects to receive $1 billion in loan cancelation requests to help approximately 72,000 students. Forgiveness under the borrower defense to repayment provision is intended to provide relief to individuals who believe they were misled by an educational institution and did not receive the education they were promised, impacting their ability to repay student loans. The streamlined approach for granting full relief replaces a formula for calculating relief. The Obama administration developed specialized loan forgiveness to provide relief to former students of for-profit college chains that defrauded students.
The Trump administration replaced the Obama administration’s approach with a process that only offered partial student loan forgiveness to individuals defrauded by for-profit colleges. The Trump administration’s changes made it less likely that applicants would receive relief. Under the Trump administration, relief was provided in tiers based on applicants’ earnings.
The Biden Administration’s plan will provide full cancellation for those who have rightful claims. It is simplified, as it will not take into account earnings data and will not provide tiered relief. When applicable, the full relief includes a cancellation of the eligible federal loans, reimbursement of payment on loans, requests for removal of negative credit reporting, and reinstatement of federal aid eligibility.
Regarding the Biden administration’s streamlined borrower defense relief process, Secretary of Education Miguel Cardona stated that “borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct.”