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72,000 Defrauded Students Could Have Loans Forgiven Under New Policy

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An estimated 72,000 student loan borrowers who were defrauded by the for-profit schools they attended could soon have their student loans forgiven in full, the U.S. Department of Education said Thursday.

The policy shift represents a reversal of a set of student loan forgiveness opportunities enacted under former Education Secretary Betsy DeVos. Under the former administration’s set of rules, some students who were determined to have been defrauded by their schools only received partial refunds.

The new policy may allow those thousands of students to receive full refunds for an estimated total of $1 billion in loan forgiveness, according to the Associated Press.

The news came in the midst of a student loan forgiveness debate Democrats are having in Washington, D.C. While President Joe Biden has said he supports some student loan debt forgiveness, some of his progressive colleagues are pushing for as much as $50,000 or more per student in debt relief.

Following the Education Department’s announcement, Senator Dick Durbin of Illinois, the Democratic whip in the upper chamber, said on Twitter he was “pleased” with the decision.

“I’m pleased Sec. Cardona is scrapping Betsy DeVos’ partial relief scheme that cheated defrauded borrowers out of the full relief to which they are entitled under borrower defense,” Durbin tweeted.

I’m pleased Sec. Cardona is scrapping Betsy DeVos’ partial relief scheme that cheated defrauded borrowers out of the full relief to which they are entitled under borrower defense. https://t.co/RQJAP1Jc9a

— Senator Dick Durbin (@SenatorDurbin) March 18, 2021

The Liberty Buzz reached out to the Department of Education for comment and will update this article with any response.

The Education Department announced Thursday an estimated 72,000 student loan borrowers who have been defrauded could have their student loans forgiven. Above, Secretary of Education Miguel Cardona speaks during the daily press briefing at the White House on March 17.
Drew Angerer/Getty Images

For more reporting on this story from the Associated Press, see below.

“Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct,” said Secretary of Education Miguel Cardona. “A close review of these claims and the associated evidence showed these borrowers have been harmed, and we will grant them a fresh start from their debt.”

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

Thursday’s action applies to students who already had their claims approved and received only partial relief, the department said.

A senior department official briefing reporters said the agency was continuing to review both the backlog of claims yet to be decided and those that have been denied.

The borrower defense to repayment program allows students to have their federal loans canceled if they were defrauded by their colleges. The Obama administration had expanded the program aimed at helping students who attended for-profit colleges. But DeVos pulled it back, saying it had become too easy for students to have their loans erased, and revised the program to make it harder for them to get relief, including providing only partial cancellation of the loans.

Congress voted to overturn DeVos’ changes last March, but it was vetoed by Trump.

Nearly two dozen state attorneys general had sued the Trump administration over its implementation of the borrower defense to repayment program, which allows borrowers to have their loans canceled if their colleges made false claims to get them to enroll. One of the plaintiffs in that suit was California Attorney General Xavier Becerra, who faced a confirmation vote Thursday to be President Joe Biden’s health secretary.

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

Biden’s Education Department called the action being taken Thursday “a first step” in addressing borrower defense claims. It said it would be looking at rewriting the regulations down the road.

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