Biden to Relieve Over $1.1 Billion in Student Loans
Around 115,000 students are to be relieved of student loans as the Biden administration announces automatic student loan forgiveness for those defrauded by the school.
This follows recent student debt-related pronouncements such as the Borrower Defense to Repayment program, the recent regulatory overhaul of key student loan forgiveness and repayment programs, including Public Service Loan Forgiveness and income-based repayment, and the cancellation of over $500 million in student loan debt last June.
Secretary of Education Miguel Cardona says, “Today’s action continues the Department’s efforts to improve and use its targeted loan relief authorities to deliver meaningful help to student borrowers.
At the same time, the continued cost of addressing the wrongdoing of ITT and other predatory institutions yet again highlights the need for stronger and faster accountability throughout the federal financial aid system.”
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Advocates including Student Defense Vice President Alex Elson praise this move by the Biden admin, saying:
“Thanks to Secretary Cardona and President Biden, thousands of former ITT students will finally get the relief they’ve been owed for far too long, at the same time, there are countless others who attended other predatory institutions who are still waiting.
We hope the Department will continue to implement our recommendations to make things right for all of them, too.”
The recent student loan cancellation initiative would only primarily students who attended ITT Technical Institutes, which abruptly closed in 2016, and the said pronouncement by the administration extends relief to “borrowers whose attendance at ITT overlapped with a period during which the institution engaged in widespread misrepresentations about the true state of its financial health and misled students into taking out unaffordable private loans that were allegedly portrayed as grant aid.”
This program will be formally called the “Closed School Discharge Program“. The ITT was shut down in 2016 after investigations showed that the institution could have been keeping wrongdoings under wraps.
Now, the shutdown affected students who were enrolled at the school and the closed-school discharge program would enable them to be forgiven of their federal student loans because they were unable to graduate from their degree due to the school’s shutdown.
More important details to consider: only federal student loans qualify — not private student loans. The Department of Education says that “borrowers who are eligible for the closed school discharge initiative and attended a covered institution that closed between November 1, 2013, and July 1, 2020, will receive an automatic discharge of their associated federal student loans as long as they did not enroll in another institution within three years of their school’s closure.” In September, the Department of Education is expected to start processing these cases.