Buzz
The Department of Education has announced it will forgive approximately $1 billion in student loan debt for those who were misled or scammed. This change relaxes the loan restrictions imposed during the Trump administration for such claims and ensures full forgiveness for claims that were previously approved but did not receive a complete discharge.
How to qualify for loan cancellation
The Borrower Defense to Repayment program allows you to apply for student loan forgiveness if your school engaged in fraud regarding your tuition or misrepresented aspects of your education. This is commonly an issue with for-profit institutions. These false representations may include misleading claims about the school’s selectivity in admitting students, its ranking compared to other institutions, and false promises regarding job placement, earnings, or the transferability of credits to and from other schools.
The crucial aspect here is demonstrating that you were misled—you won’t qualify for cancellation simply due to poor course quality, inadequate teaching, disputed grades, or inferior facilities.
What has changed?
The Biden administration has overturned a Trump-era policy that only provided partial relief to students, aiming to assist about 72,000 borrowers with $1 billion in loan cancellation. The Department of Education reports that by March, 343,331 applications for relief were submitted, with only 61,511 approved. Secretary of Education Miguel Cardona commented:
Borrowers deserve a fair and streamlined process for relief when they've been affected by their institution’s wrongdoing. A thorough review of these claims and the related evidence has confirmed the harm done to these borrowers, and we will offer them a fresh start from their debt.
Full relief under the new regulations will include:
Complete discharge of federal student loans related to borrowers, 100 percent.
Reimbursement for any payments made on these loans, as per the applicable regulations.
Requesting credit bureaus to remove any negative credit reports linked to the loans.
Restoration of eligibility for federal student aid, where applicable.
The department referred to Thursday's action as an initial move and indicated that further efforts to revise the regulations would follow in the future.
Eligibility Criteria
According to Yahoo!, borrowers with existing Borrower Defense claims should expect to receive a notice within the next few weeks, followed by the forgiveness of their loans—this may cover the remainder of an earlier claim or fully satisfy a recent claim submission.
To submit a new claim, click here. If you're uncertain about your eligibility, review the instructions in the Borrower Defense application form, which provides detailed guidance on determining your loan forgiveness eligibility.
