The Biden administration on Wednesday announced that it has approved $72 million in new student loan forgiveness for borrowers who were defrauded by their school.
The announcement comes on the heels of additional student loan forgiveness initiatives that have benefited hundreds of thousands of borrowers, despite this summer’s earlier Supreme Court ruling blocking President Biden’s separate mass student debt relief plan.
New Student Loan Forgiveness For Defrauded Borrowers
The Education Department approved the newly-announced loan forgiveness under the Borrower Defense to Repayment program. That program can provide student debt relief to borrowers who were misled or defrauded by their school through misrepresentations or false promises about key aspects of their program, such as admissions selectivity or career prospects.
Today’s announcement specifically pertains to borrowers who attended Ashford University, which was an online California-based for-profit school. The Education Department, citing to prior legal findings made in court against the school, concluded that the school had engaged in “extensive substantial misrepresentations” about career prospects, cost of attendance, and the transferability of credits to other institutions.
“As the California Department of Justice proved in court, Ashford relied extensively on high-pressure and deceptive recruiting tactics to lure students,” said U.S. Under Secretary of Education James Kvaal in a statement on Wednesday. “Today we are protecting the students who were cheated by Ashford, and we will also hold the perpetrators accountable, protect taxpayers, and deter future wrongdoing.”
Who Qualifies For Student Loan Forgiveness
More than 2,300 former Ashford students who attended the institution between March 1, 2009, through April 30, 2020, and who submitted Borrower Defense to Repayment applications with allegations corroborated by the Education Department, are approved for federal student loan forgiveness.
“Borrowers will not have to make any payments on the loans being discharged,” according to the department. “The Department will email borrowers who qualified for a borrower defense discharge in September that their applications have been approved. Borrowers will see any remaining loan balances for federal loans zeroed out and credit trade lines deleted. Any payments those borrowers made to the Department on their federal student loans will be refunded.”
Unlike several previous group discharges under the Borrower Defense program, only borrowers who applied for relief and demonstrated sufficiently corroborated allegations were approved. However, borrowers can still apply for loan forgiveness.
“Borrowers who attended Ashford during this period, were harmed by these misrepresentations, and have not yet applied for borrower defense can visit StudentAid.gov/borrower-defense to submit a claim,” said the department.
Legal Battle Continues Over Student Loan Forgiveness Through Borrower Defense
Today’s announcement is just the latest development in the rollercoaster of changes for the Borrower Defense to Repayment program.
The Biden administration developed new, more borrower-friendly regulations governing the Borrower Defense program, which were supposed to go into effect on July 1. Those new rules expanded the definition of misconduct that would qualify borrowers for student debt relief, banned mandatory arbitration, and made it easier for the Education Department to provide student loan forgiveness to groups of similarly situated borrowers.
But earlier this month, the Fifth Circuit Court of Appeals granted a nationwide injunction to block those new rules from going into effect. This does not eliminate the Borrower Defense to Repayment program, but leaves in place an earlier set of rules implemented by the Trump administration that many borrower advocates view far less favorably. The legal battle at the Fifth Circuit is ongoing, and it is unclear if the new rules will go back into effect at some point.
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