WASHINGTON (AP) – Students who were defrauded by their colleges and received only partial relief from their federal loans could now see them canceled completely, the Biden administration announced Thursday, reversing a Trump policy.
The change could result in $ 1 billion in loans being canceled for 72,000 borrowers, all of whom went to profitable schools, the Department of Education said.
“Borrowers deserve a simplified and fair path to aid when they have been harmed by their institution’s misconduct,” said Education Minister Miguel Cardona. “A careful review of these claims and the accompanying evidence showed that these borrowers have suffered, and we will give them a fresh start with their debt.”
The department said it repealed the formula used by the Trump administration to determine partial relief and put in place “a streamlined path to receiving full loans.”
The decision applies to students who had already approved their claims and only received partial compensation, the department said.
An official senior department briefing reporter said the agency is continuing to assess both the backlog of claims that have yet to be decided and those that have been denied.
The department described Thursday’s move as “a first step” and said it would look at rewriting the regulations down the road.
In addition to canceling their loans completely, students will be reimbursed for all payments made on the loans and their entitlement to federal student grants will be restored. The department said it would also ask credit bureaus to remove any negative reviews associated with the loans.
“Giving up partial relief is a strong start for a small group of borrowers, but what we need from the Education Department is a review of the current borrower defense process,” said Toby Merrill, director of the Project on Predatory Student Lending. former students at for-profit colleges.
“The previous administration turned the borrower’s defense into a total sham rigged to deny claims without any real consideration,” Merrill said. “The Biden-Harris administration must now address these shortcomings or otherwise maintain a system stacked up against the very students they are supposed to protect.”
Career Education Colleges and Universities, an industry lobby group, said it had no comment on the actions of the Biden government.
The Borrower Defense Program Repayment Program allows students to cancel their federal loans if they were defrauded by their colleges. The Obama administration had expanded the program to help students attending for-profit colleges. But President Donald Trump’s education secretary, Betsy DeVos, withdrew itand said it had become too easy for students to cancel their loans, and revised the program to make it more difficult for them to get relief, including canceling the loans only partially.
Congress voted to reverse DeVos’ changes last March, but Trump vetoed it.
Nearly two dozen state attorneys general had charged the Trump administration on the implementation of the Borrower Repayment Defense Program, which allows borrowers to cancel their loans if their colleges have made false claims to induce them to enroll. One of the prosecutors in that lawsuit was California Attorney General Xavier Becerra, who was confirmed on Thursday as President Joe Biden’s health secretary.
The lawsuit, filed last July, argued that DeVos had changed policies without justification, provided no meaningful process for students to forgive their loans, and created “ arbitrary barriers ” for them, including forcing them to prove their schools knowingly deceived them.
Rep. Bobby Scott, chairman of the House Committee on Education and Labor, said DeVos had used a “nonsensical formula” to calculate the emergency aid and that Thursday’s move would “change the lives of tens of thousands of people across the country.”