Education department abandons DeVos loan relief standard (1)
Biden administration to drop standards issued by former education secretary Betsy DeVos which only granted partial loan forgiveness to defrauded student borrowers.
Secretary Miguel Cardona’s announcement is the first step in a broader overhaul of the Education Department’s policies to assist borrowers whose schools have engaged in fraud or misconduct.
About 72,000 borrowers on federal student loans will receive $ 1 billion in additional debt relief after the decision, the ministry said. All of these borrowers attended for-profit colleges.
Progressives in Congress have called on President Joe Biden to cancel thousands of student loans for federal borrowers at all levels through executive action. The White House has argued that Congress should provide broad legislative debt relief. The education ministry could, however, grant additional debt relief under existing regulations to thousands of borrowers who claim they have been defrauded.
“Borrowers deserve a streamlined and fair path to relief when they have been harmed by the misconduct of their institution,” Cardona said in a statement. “Careful examination of these claims and the associated evidence has shown that these borrowers have been wronged and we will give them a fresh start on their debt.”
The decision only affects borrowers whose requests for debt relief have already been approved by the agency. However, more significant changes are coming in federal policies on student loan relief. The education ministry said it plans to develop new rules on “repayment defense” regulations that govern loan cancellation for borrowers who say they have been cheated or misled by their colleges.
DeVos issued a defense against repayment regulations in 2019 that raised the bar for borrowers to gain approval to cancel the loan. The regulations are estimated to reduce loan relief by $ 11 billion over 10 years from standards under President Barack Obama’s administration.
The Trump administration followed through on this rule by issuing a new standard that only granted partial loan relief to borrowers whose claims were proven valid. A previous attempt to cut relief for defrauded borrowers was blocked by a federal court.
House Democrats criticized the new standards and called on DeVos to provide full relief to borrowers under the law. A senior ministry official said the Biden administration determined that defrauded borrowers were not receiving the appropriate amount of loan relief given the harm they suffered and the evidence presented in their claims.
The new standard announced Thursday will also apply to borrowers who have already benefited from debt relief under the DeVos 2019 standard.
representing Bobby scott (D-Va.), Chair of the House Education and Labor Committee, called the announcement a life-changing for thousands of borrowers.
“I applaud the Biden administration for doing the right thing in healing these borrowers, and I can only imagine the mixture of joy and relief they feel today,” he said. in a press release.
To contact the reporter on this story: Andrew Kreighbaum in Washington at [email protected]