The Biden administration cancelled another $55 million of student loans today, marking a total of $1.5 billion of student loans cancelled this way.
Here’s what you need to know — and what it means for your student loans.
The U.S. Department of Education today announced that more students will get full student loan cancellation today. Here’s how to qualify
- $55.6 million of student loan cancellation
- 1,800+ student loan borrowers
- 100% full student loan cancellation
- based on borrower defense to repayment claims
- impacts student loan borrowers who attended three institutions, including Westwood College, Marinello Schools of Beauty and the Court Reporting Institute.
- With today’s student loan cancellation, Biden has now cancelled more than $1.5 billion of student loans due to borrower defense to repayment, which has helped 92,000 student loan borrowers.
This is the first time since 2017 that the Education Department has announced an approval of a borrower defense claim for students who attended an institution other than Corinthian Colleges, ITT Technical Institute or American Career Institute.
“Today’s announcement continues the U.S. Department of Education’s commitment to standing up for students whose colleges took advantage of them,” U.S. Secretary of Education Miguel Cardona said. “The Department will continue doing its part to review and approve borrower defense claims quickly and fairly so that borrowers receive the relief that they need and deserve. We also hope these approvals serve as a warning to any institution engaging in similar conduct that this type of misrepresentation is unacceptable.”
Why student loan cancellation?
Why did these student loan borrowers get student loan cancellation? Their claims are based on borrower defense to repayment. Borrower defense to repayment is a federal regulation that began under the Obama administration that allows you to get student loan cancellation if you were misled or defrauded by your college or university. Borrower defense applies to federal student loans only. While borrower defense includes Direct Loans, it does not include FFELP Loans or Perkins Loans. One reason is that student loan cancellation doesn’t apply to everyone. However, the good news is that you can still qualify for borrower defense to repayment if you have FFELP or Perkins Loans. How? Consolidate your FFELP or Perkins Loans into a Direct Consolidation Loan. Contact your student loan servicer for details.
Student loan cancellation: what happened
According to the Education Department:
$53 million of student loan cancellation for 1,600 borrowers
First, from 2002 through its 2015 closure, the Education Department found that all of Westwood’s campuses engaged in widespread misrepresentations about the ability of students to transfer credits to other colleges and universities. Second, from 2004 until 2015, Westwood made substantial misrepresentations to students that its criminal justice program would lead to careers as police officers in Illinois, particularly in Chicago. However, the Chicago Police Department would not accept Westwood credits in their hiring process. The Education Department said that students were “worse off” after attending Westwood.
Marinello Schools of Beauty
$2.2 million of student loan cancellation for 200 borrowers
From 2009 until its closure in 2016, the Education Department found that Marinello Schools of Beauty made substantial misrepresentations about the instruction that would be offered at its campuses across the country. Despite being a beauty school, students claimed that the school failed to teach the basics of cosmetology, including how to cut hair. The Education also concluded that that Marinello left students without instructors for weeks or months, making it difficult to pass necessary state licensing tests.
Court Reporting Institute
$340,000 of student loan cancellation for 18 borrowers
From 1998 through its 2006 closure, the Education Department found that Court Reporting Institute made substantial misrepresentations about the time it would take students to complete its court reporting program. Data reviewed by the Department showed that just 2% – 6% of students graduated, and those who finished the program took much longer to do so than the institution claimed.
Biden has cancelled $3 billion of student loans
Since becoming president in January, Biden has now cancelled nearly $3 billion of student loans:
- Biden cancelled $1 billion of student loans for 72,000 student loan borrowers.
- Biden cancelled another $1.3 billion of student loans for 41,000 borrowers with total and permanent disability.
- Biden granted student loan relief for 1.1 million student loan borrowers who defaulted on their FFELP Loans.
- Today, Biden cancelled $500 million of student loan debt for 18,000 student loan borrowers under the borrower defense to student loan repayment rule.
Student loan cancellation: next steps
Is this a game changer for student loan cancellation? While this announcement impacts a small cross section of the 45 million total student loan borrowers, the good news is that there will be more student loan cancellation. There are at least four ways that Biden can enact student loan cancellation. There are also multiple efforts to help student loan borrowers get more student loan cancellation. First, Biden has been focused on targeted student loan cancellation to help certain groups of student loan borrowers get student loan relief. Borrower defense to repayment is only one example. Second, the Education Department is preparing a legal memo to Biden that will evaluate Biden’s authority as president to cancel student loan debt without further congressional authorization. This could result in wide-scale student loan cancellation or other types of student loan forgiveness, including student loan relief. Third, Democrats in Congress have proposed 5 changes to student loan cancellation. Fourth, the Education Department held hearings on student loans, which could change the future of student loan repayment and student loan forgiveness. Fifth, Biden may extend temporary student loan forbearance beyond September 30, 2021.
If you’re paying off student loans, make sure you know all your options for student loan repayment. If you qualify for student loan cancellation, it may or may not cover all your student loans. Here are some popular options: