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students who got partial loan relief to see their full leave | Voice of America

By on March 23, 2021 0

WASHINGTON – Students who were swindled by their colleges and received only partial relief on their federal loans could now see them fully canceled, the Biden administration said Thursday, reversing a Trump administration policy.

The change could result in the cancellation of $ 1 billion in loans for 72,000 borrowers, all of whom attended for-profit schools, the education ministry said.

“Borrowers deserve a simplified and fair remedy when they have been harmed by the bad conduct of their institution,” said Education Secretary Miguel Cardona. “Careful examination of these claims and the associated evidence has shown that these borrowers have been wronged, and we will give them a fresh start on their debt.”

FILE – Miguel Cardona, then chosen by President Joe Biden to become Secretary of Education, testifies before the Senate Committee on Health, Education, Work and Pensions during its confirmation hearing in Washington on 3 February 2021.

The department said it was reversing the formula used by the Trump administration to determine partial relief and putting in place “a streamlined path to get full loan discharge.”

The ruling applies to students who have already had their applications approved and received only partial relief, the department said.

A senior ministry official told reporters the agency continued to review both the backlog of pending claims and those that were denied.

“A first step”

The ministry called Thursday’s action a “first step” and said it would consider rewriting the regulations later.

In addition to having their loans fully canceled, students will be reimbursed for all payments made on the loans and their eligibility for federal student assistance will be reinstated. The department said it will also ask credit bureaus to remove any negative ratings related to loans.

“Dropping partial relief is a good start for a small subset of borrowers, but what we need from the Department of Education is a revamp of the current borrower advocacy process.” Said Toby Merrill, director of the Project on Predatory Student Lending, which represents former students at for-profit colleges.

“The previous administration turned the borrower’s defense into a total sham that was rigged to deny claims without any real consideration,” Merrill said. “The Biden-Harris administration must now remedy these failings or else perpetuate a system that opposes the very students it is meant to protect.”

Career Education Colleges and Universities, an industry lobby group, said it had no comment on the actions of the Biden administration.

FILE – Then-Education Secretary Betsy DeVos speaks in the James Brady press room March 27, 2020, in Washington.

DeVos movements

The Borrower Against Repayment Defense program allows students to cancel their federal loans if they have been 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 it, saying it had become too easy for students to have their loans written off. She revised the program to make it more difficult for students to obtain relief, including by only partially canceling loans.

Congress voted to reverse DeVos’ changes last March, but Trump vetoed the measure.

Nearly two dozen state attorneys general have sued the Trump administration over its implementation of the repayment program, which allows borrowers to have their loans canceled if their colleges make false statements to get them to enroll. One of the plaintiffs in that lawsuit was California Attorney General Xavier Becerra, who was confirmed Thursday as President Joe Biden’s health secretary.

The lawsuit, filed last July, claimed DeVos had changed policy without justification, failed to provide a meaningful process for students to get their loans canceled, and created “arbitrary hurdles” for them, including forcing them to prove that their schools had knowingly misled them. .

US Representative Bobby Scott, chairman of the House Committee on Education and Work, said DeVos used an “absurd formula” to calculate relief and Thursday’s action “would change the lives of tens of thousands people across the country “.

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