The Biden administration on Wednesday announced that it will be cancelling $500 million in student loan debt for thousands of student loan borrrowers.
The student loan forgiveness will be granted through the Borrower Defense to Repayment program. The program, which was established with formal regulations and procedures under the Obama administration in 2016, provides student loan forgiveness to students who were misled, defrauded, or otherwise harmed by predatory colleges and universities – often, for-profit schools.
Under former Education Secretary Betsy DeVos, the Department of Education issued new rules governing the Borrower Defense program, which substantially weakened the available relief and increased the burden of proof required to prevail. The Department also instituted a controversial new policy of providing partial (instead of complete) student loan forgiveness for approved applications.
Under the Biden administration, Education Secretary Miguel Cardona changed the “partial relief” policy for approved Borrower Defense applications, allowing borrowers to receive complete student loan forgiveness, along with refunds for payments already made.
The most recent wave of Borrower Defense approvals will provide for complete federal student loan cancellation for 18,000 borrowers who attended ITT Technical Institutes, a for-profit college chain that collapsed in 2016 following allegations of widespread fraud. These approvals are in addition to Borrower Defense relief announced by the Department of Education earlier this year, which will impact 72,000 additional student loan borrowers who applied for loan forgiveness.
“Our action today will give thousands of borrowers a fresh start and the relief they deserve after ITT repeatedly lied to them,” said Secretary Cardona in a statement. “Today’s action is part of the Biden-Harris Administration’s continued commitment to stand up for borrowers when their institutions take advantage of them. Many of these borrowers have waited a long time for relief, and we need to work swiftly to render decisions for those whose claims are still pending. This work also emphasizes the need for ongoing accountability so that institutions will never be able to commit this kind of widespread deception again.”
According to the statement, the Department of Education will begin notifying borrowers of their approvals in the coming weeks and will then work “expeditiously” to cancel the loan balances for these borrowers.
The student debt cancellation announced today amounts to a tiny fraction of outstanding student loan debt, however, and advocates for student loan borrowers continue to press the administration to take steps to enact more widespread student loan forgiveness.
“We are glad that the Department is finally providing this long overdue relief to some former ITT students,” said Abby Shafroth, staff attorney at the National Consumer Law Center. “These borrowers and their families are struggling, some for more than a decade, under the weight of student loans they would never have taken on if they were told the truth about the school’s lies regarding job placement, or if the Education Department had cut ITT off the federal aid gravy train when it should have long ago. This is only a first step: hundreds of thousands of other former ITT students were subject to the same lies, and the government must stop collecting on these fraudulent loans and cancel their debts immediately. The Education Department also must address the other 100,000 plus borrower defense applications from borrowers at other schools, which remain outstanding.”
In the last week, advocates have pressed the administration to automatically cancel the student loan debt for 500,000 disabled borrowers and millions of borrowers seeking relief under the Public Service Loan Forgiveness (PSLF) program. Meanwhile, the Biden administration is in the midst of a legal review to determine whether the President has authority to unilaterally cancel student loan debt on a wider scale using executive action. The results of that review could be released in the coming months.