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The Biden administration agrees to cancel an additional $ 6 billion of student loan debt for fraudulent borrowers

Washington (CNN)The Biden administration has about 200,000 borrowers fooled by their colleges.

The administration previously approved a $ 25 billion loan forgiveness for 1.3 million borrowers. About 43 million Americans are in debt for federal student loans.

Many of the borrowers affected by the new contract have been waiting for years for the Ministry of Education to process their claims under a rule known as the borrower's defense against repayments. This allows borrowers who believe they have been fooled by the university to request federal student loan relief, often with higher employment rates or transfer of credits.

Seven of these borrowers filed a class action proceeding in 2019 over the processing of claims by the department. Under former Secretary of Education Betsy DeVos, the processing of the application was stalled. However, the Biden administration is cutting the unprocessed portion.

Clean up the remaining federal student loan debt to the affected 200,000 borrowers between the plaintiff and the Ministry of Education as part of a federal proposed settlementThe contract has been concluded. Wednesday court. Still, the approval of the judge is required.
According to the proposed settlement agreement, approximately 200,000 borrowers will automatically receive full debt relief within a year of the agreement's official entry into force. increase. These eligible borrowers are in one of dozens of schools already determined by the department to engage in fraud that justifies debt relief, such as the Art Institute, ITT Tech, and Westwood College. went.

Another 64,000 borrowers who have already filed a borrower defense claim may also be eligible for debt relief under the proposed settlement agreement, based on how long the application is pending. And make a decision on the application within the deadline.

Both the plaintiff and the Ministry of Education stated they were satisfied with the agreement.

"This serious reconciliation proposal is for borrowers who have long fought hard for a fair resolution of their defense claims after being deceived by the school and ignored or rejected by the government. It will bring answers and certainty. " Irene Connor, director of the Harvard Law School's predatory student lending project on behalf of the borrower.

In a statement, Secretary of Education Miguel Cardona stated that the bailout "solves plaintiffs' allegations in a fair and impartial manner for all parties."

"Since day one, the Biden Harris administration has been working to address long-standing problems associated with the borrower's defense process," he added.

Targeted Debt Relief

The Biden administration has so far taken a fragmentary approach to canceling federal student loan debt. Already billions of dollars for other borrowers fooled by the university, including $ 5.8 billion for 560,000 borrowers who participated in thecommercial Corinthian College systemthat collapsed in 2015 I wiped it out.

The government has also temporarily expanded its eligibility for what is known as the Civil Service Loan Exemption Program. This cancels the remaining federal student loan debt after the government or non-profit workers have made eligible payments for 10 years. This expansion has so far canceled $ 6.8 billion for more than 113,000 borrowers.

The Biden administration has also madechanges to its existing income-driven repayment plan,closer to forgiving millions of borrowers.

Over $ 8.5 billion was automatically canceled for more than $ 400,000 borrowers who were permanently disabled and were previously eligible for debt relief but had not applied for it.

Biden is considering a broader student loan exemption

Cancel $ 50,000 per borrower from other Democrats in April After pressure, President Joe Bidenconsiders a wide range of student loan forgiveness, albeit a small amount.

In the course of the campaign, Biden said he would forgive and support $ 10,000. White House officials say they are also considering setting income thresholds to exclude high-income borrowers from debt relief. The

decision will be made by August 31, when thepandemic-related suspensionfor federal student loan payments is set to end.
Extensive student loan debt repayments can bring financial relief to millions of Americans, but are the effects of such significant policy moves intended? Regardless,complexitself does nothing to lower college costs for future borrowers, or to help those who have already paid a degree.