Student Loan Forgiveness: Biden Approves Cancellation Of $ 9.5 Billion Student Loans This Year

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Most of this debt belongs to permanently disabled borrowers who have long been eligible for loan forgiveness but have not applied. Department of Education make cancellation automatic using federal data to identify suitable borrowers. This change will affect 320,000 borrowers, and starting in September, $ 5.8 billion in debt will be written off.

Much of the other debt relief measures will benefit victims of commercial college fraud, many of whom have waited years for the Education Department to review their forgiveness claims. The latter action will automatically cancel the debt of 115,000 students who left ITT Tech before completing their program after March 2008.

According to the Ministry of Education, about 43% of these borrowers currently do not default on their loans. The move came after a new review of issues at ITT Tech revealed that these borrowers were attending school at a time when the school was misleading students into taking private loans that were allegedly portrayed as grant aid and were involved in widespread misrepresentation. regarding the financial health of the institution.

“Today’s actions are a continuation of the Department’s efforts to improve and use targeted lending bodies to provide meaningful assistance to student borrowers,” Education Minister Miguel Cardona said in a statement.

“At the same time, the continuing cost of correcting violations by ITT and other predatory institutions further underscores the need for stronger and faster accountability across the entire federal financial aid system,” he added.

Biden extends pause in student loan repayment until January 31
The Biden administration is already approved a write-off of about $ 1.5 billion in student debt earlier this year for other former commercial college students. By law, borrowers who have been defrauded by their college can apply for debt relief. The forgiveness process was simplified during the Obama administration, when major commercial colleges such as Corinthian and ITT Tech closed.
But the Trump administration has allowed a backlog of more than 100,000 forgiveness suits. Former education secretary Betsy DeVos made it clear that she believes the following rule applies:bad politics“which puts taxpayers on the hook for debt relief spending without adequate guarantees and makes changes to limit coverage.

There are many borrowers eligible for debt relief who can still wait, according to Student Defense, a nonprofit group that defends student rights and is urging the Department of Education to speed up the process.

“Thanks to Secretary Cardona and President Biden, thousands of former ITT students are finally getting the relief they’ve been laughed at for too long. At the same time, there are countless others who have visited other predatory institutions who are still waiting, ”Vice President of Student Protection Alex Elson said in a statement.

Democrats push for broader debt cancellation

Key Democratic lawmakers, including Senate Majority Leader Chuck Schumer of New York and Senator Elizabeth Warren of Massachusetts, are pressuring Biden to go further and altogether cancel up to $ 50,000 student loan per borrower.
It would be an unprecedented step, but memo lawyers from the Harvard Legal Services Center and its Predator Student Lending Project say the Department of Education has the authority to do so.

Biden, who announced during the presidential campaign that he would support the abolition of $ 10,000 on a borrower, has repeatedly resisted pressure since taking office, arguing that the government should not forgive debts to people who went to Harvard, Yale, and Penn. At this point, he has instructed Cardona to write a memorandum on the executive’s legal authorities on debt cancellation.

Biden recently extended the pause due to the pandemic on federal student loan payments another four months until January 31st.

Borrowers’ balances have been virtually frozen for more than a year, with no federal loan payments required since March 2020. During this time, interest stopped accumulating, allowing the average borrower to save about $ 2,000 in the first year, and collection of outstanding debts was suspended.

The assistance is even more significant for those working in the public sector and may be eligible for loan forgiveness after 10 years. They still receive credit for those 10 years of mandatory payments as if they continued to pay them during the pandemic, as long as they still work full time for suitable employers.

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