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How debt forgiveness will cancel $1bn in student loans ─US Government

*The United States Department of Education says it is adopting a ‘streamlined approach’ for granting full relief under the regulations to borrower defence claims to receive $1 billion in student loan cancellation

Isola Moses | ConsumerConnect

In a follow-up to the US President Joe Biden administration’s announcement that it will give full debt relief to students defrauded by private, for-profit colleges, the Department of Education (DOE) has released the specifics of how the programme will work.

In the first instance, the DOE said the programme would replace the student loan relief program established during the Trump administration under former DOE Secretary Betsy DeVos, agency report noted.

Students in one of the tertiary institutions in the US

After completing a comprehensive review of that methodology, the Biden-era DOE concluded that DeVos’ version did not result in an appropriate relief determination.

According to the officials, this is just a beginning; that is, a first step in addressing borrower defense claims as well as the underlying regulations.

They say they will be pursuing additional actions, including re-regulation of student loans in the future, according to report.

In its place, the “new” DOE under Secretary Dr. Miguel Cardona will be employing what it calls a “streamlined approach for granting full relief under the regulations to borrower defense claims approved to date.”

The agency believes this change will help approximately 72,000 borrowers who will receive $1 billion in loan cancellation.

But to whom does this apply? The DOE says the forgiveness programme employs the “borrower defense to repayment” and is for borrowers who a) seek cancellation of their William D. Ford Direct Loan; and, b) have “claims approved to date that their institution engaged in certain misconduct.”

A DOE spokesperson told ConsumerAffairs, that among the 72,000 eligible claims, the vast majority of these borrowers attended Corinthian Colleges, while a smaller subset attended ITT Technical Institute.

The new loan forgiveness programme also includes borrowers with previously approved claims that received less than a full loan dismissal. Full relief under the regulations of the new program will include:

100 percent discharge of borrowers’ related federal student loans;

Reimbursement of any amounts paid on the loans, where appropriate under the regulations;

Requests to credit bureaus to remove any related negative credit reporting; and

Reinstatement of federal student aid eligibility, if applicable.

Changes to the claims process

The DOE will begin applying this new approach effective immediately. Affected borrowers should receive notices over the next several weeks with loan dismissals following after that.

An agency spokesperson also said that the Department of Education is not changing the process of adjudicating claims.

A thorough review will still be conducted to determine whether there is sufficient evidence of misconduct to merit a valid claim.

Updated information for borrowers, applications for Borrower Defence, and application management is all available at, stated the DOE.

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