Last week, the Biden administration announced a sweeping initiative to forego billions of dollars in automatic student loan foreclosures for over half a million borrowers. The Department of Education called the student loan forgiveness initiative one of the largest in history.
But while hundreds of thousands of borrowers see their student debt automatically wiped out, the program underlying the administration’s latest cancellation of student loans is open to anyone. Here are the details.
Student Loan Forgiveness for Borrowers Scammed by Corinthian Colleges
The Biden administration’s announcement last week focused on a federal student loan cancellation program called Borrower Defense to Repayment. This program allows federal student borrowers to apply for loan forgiveness if they have been defrauded or misled by their school by providing false information about critical elements of their degree program, such as admissions, loan portability, or career prospects.
Through Borrower Defense to Repayment, the Department of Education will cancel nearly $6 billion in government student loans for 560,000 alumni from Corinthian Colleges. Corinthian was a notorious national chain of for-profit colleges that collapsed in 2015 under the weight of numerous federal and state investigations into its activities.
Lawsuits against the schools, including an early lawsuit by Kamala Harris when she was serving as California Attorney General, have alleged that Corinthian intentionally misrepresented placement rates and falsely advertised. The federal government later found that Corinthian had misrepresented students’ ability to transfer credit to other institutions.
When Corinthian collapsed in 2015, alumni were left with mountains of debt and useless degrees (or, in some cases, no degrees at all). Dozens of these students organized a debt strike in 2015 to pressure the federal government to forgive their student debt, and their efforts eventually led to the establishment of a formal borrower defense filing process.
But the Borrower Defense Program has been mired in political, bureaucratic and legal problems ever since. The course regulations have been rewritten several times. And tens of thousands of applications remain unprocessed.
The Biden administration’s new initiative will forgive all former Corinthian students’ federal student loan debt through borrower defense pending repayment. And while the Borrower Defense Program usually requires a formal application for relief, the administration will automatically enforce the Corinthian student loan cancellation, even for borrowers who have never filed a Borrower Defense Application.
Borrowers can still request student loan cancellation through the Borrower Defense for repayment
While student loan borrowers who didn’t attend Corinthian schools aren’t covered by last week’s announcement, that doesn’t mean you can’t get student loan forgiveness through the Borrower Defense Pending Repayment. All you have to do is submit a formal application.
“As part of the borrower defense for repayment [program], certain behaviors by a school you attended could qualify you to receive a redemption on some or all of your federal student loans,” the Department of Education says in instructions accompanying the borrower defense application. “The most common behaviors that could make a borrower eligible for credit relief through the Borrower Defense Until Repayment Relief are misrepresentations of the truth made by the school or its representatives during their efforts to persuade you to enroll at the school or for continuing to win your enrollment in college. These misrepresentations typically take the form of misrepresentations of the school’s selectivity in admitting students, its ranking relative to other schools, the job placement and earnings results of its past graduates, or the likelihood that their credits will be obtained from another school or those credits from other schools are accepted.”
The borrower’s request for repayment is lengthy and asks many questions about the borrower’s experience at the school in question and examples of alleged misconduct by the school. It is important to be very specific and detailed, and to include supporting documentation and evidence where possible.
“Borrowers should fill out the application form carefully, providing as much accurate and detailed information as possible,” says the National Consumer Law Center in its blog on borrower defenses to repayment. “If borrowers are familiar with lawsuits filed against their school, they should mention this on their application form. Although not required, the application form encourages borrowers to submit additional documentation or other evidence such as transcripts, enrollment agreements, and/or school promotional materials.”
Borrowers can also review a detailed guide created by the New York Legal Assistance Group (NYLAG) to help people navigate the accounts payable defense process.
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