The Department of Education announced that they will forgive approximately $1 billion in student loan debt for borrowers who have been misled or scammed. The move loosens Trump-era loan restrictions for this type of claim, and includes full forgiveness for previously approved claims that received less than a full loan discharge.
How to qualify for debt cancellation
Through the Borrower Defense to Repayment program, you can apply for student loan forgiveness if your school has either been fraudulent with your tuition or misled you about your education (this is more commonly a problem with for-profit schools). These misrepresentations include untruthful claims of the school’s selectivity in admitting students, its rankings compared to other schools, false promises of job placement, earnings, or transferability of credits to and from other schools.
The key part here is proving that you were misled—you will not qualify for cancellation based on the poor quality of the course material or teaching staff, disputed grades, or substandard facilities.
The Biden administration reverses a Trump policy that only granted partial relief to students, and will help approximately 72,000 borrowers receive $1 billion in loan cancellation. The Department of Education says that a total of 343,331 applications for relief had been received as of March, but only 61,511 have been approved. Secretary of Education, Miguel Cardona, said in a statement:
Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct. 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.
Full relief under the regulations 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.
- Reinstatement of federal student aid eligibility, if applicable.
The department described Thursday’s action as “a first step,” and said it would be looking at rewriting the regulations down the road.
How to qualify
Per Yahoo!, those with existing Borrower Defense claims can expect to receive a notice over the next several weeks, followed by forgiveness of your loans—whether that’s the remaining partial amount of a previous claim, or the entirety of an existing claim that was recently submitted.
To make a new claim, click here. If you’re unsure if you qualify, take a look at the instructions in the Borrower Defense application form, as it provides helpful guidance on determining whether you’re eligible for loan forgiveness.