Biden formalized the cancellation of Trump-era policies that limited aid to key program

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The Biden administration on Tuesday provided detailed legal and policy rationales for repealing Trump-era policies that limited aid to borrower-to-maturity protection, a key federal student loan forgiveness program.

The Borrower to Maturity Protection Program has been established with formal regulations and procedures in accordance with Obama administration in 2016. The program pays federal student loan debt for students who have been misled, defrauded, or otherwise harmed by their school’s predatory or illegal activities (usually for-profit institutions).

Under the Trump administration, the Department of Education enacted new policies and regulations governing the borrower protection program, significantly weakening the available aid. One of these policies allowed the Department to provide only partial student loan forgiveness to borrowers who were identified as eligible for dismissal. The Department has developed a methodology based on comparing the borrower’s earnings from work with the typical earnings of graduates of similar programs in other institutions; the amount of student loan forgiveness can be significantly reduced if the borrower’s income is deemed too high. As a result, many student loan borrowers with approved borrower protection requirements were left with minimal levels of real aid.

In March this year, Biden’s Education Minister Miguel Cardona announced that the administration was scrapping the “partial compensation” policy for approved borrower protection applications, allowing borrowers to receive full student loan forgiveness for approved claims, as well as refunds. Already done. Since then, the administration has announced an additional $ 1.5 billion in borrower protection assistance to more than 90,000 borrowers (including $ 500 million in June).

Tuesday administration formalized abandoning the Trump-era “partial bailout” policy. “As of March 18, 2021, approved [Borrower Defense] claims will be assessed using a rebuttable presumption of full compensation for damage, ”the Department wrote in its explanation. The Department states that this approach “is consistent with applicable regulations in the sense that the borrower may ultimately be provided with full, partial or zero reimbursement,” and the Department has discretion to provide an appropriate level of reimbursement. The department also argued that the previous methodology, based on earnings from work, was flawed and unfair to borrowers, as the earnings data relied on by the previous administration “cannot provide a reasonable approximation to earnings for borrowers with approved borrower protection claims.” …

The Department acknowledged that, in some cases, partial compensation may be appropriate under current borrower protection rules. But the Department was unable to define “a formula-based partial reparation methodology that would lead to consistent definitions and not face data availability or other issues.” As a result, in the future, “the Department will evaluate all approved claims using the rebuttable presumption of full redress as a starting point.” The Department wrote that schools can still argue that the amount of the borrower benefit should be reduced, but the Department has the final say.

The Department’s findings could lead to further expansion of student loan forgiveness for borrowers under the Borrower Protection Program as the administration continues to process a backlog of thousands of applications, many of which have been delayed for years. The Borrower Protection Program has been at the epicenter of political and legal battles since 2017, and some of the lawsuits filed by borrowers against the Department have not yet been fully resolved.

The Department’s latest policy statement will also contribute to the Biden administration’s broader efforts to review key federal student loan programs, including protecting the borrower to maturity through a regulatory change process. The administration recently announced a hearing schedule marking the initial phase of this overhaul. The department will also consider other key federal education loan forgiveness programs, including government service loan forgiveness, school dropouts, and the Permanent Disability Disability (TPD) program.

Further reading

Biden Automatically Cancels $ 5.8 Billion Student Loans For Over 300,000 Disabled Borrowers

Biden wants to cancel the “targeted” student loan – but what does that mean?

Biden administration begins revising income-based student loan forgiveness and repayment programs

Biden administration retroactively cancels student loan interest for 47,000 military personnel

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