Student loan debt: Biden cancels another $3.9 billion for former for-profit college students

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Some former ITT Tech students were already eligible for debt forgiveness, but now the department is automatically canceling all remaining federal student loans that borrowers have hired to attend the school from January 1, 2005, through its closure in September 2016.

“It is time for student borrowers to stop carrying the burden of ITT’s years of lies and false promises,” Education Minister Miguel Cardona said in a statement on Tuesday.

“The evidence shows that for years ITT leaders have deliberately misled students about the quality of their programs to take advantage of federal student loan programs, without considering the hardship this would cause,” he added.

Who is eligible for student debt relief?

Former ITT Tech students on federal student loans are eligible for the cancellation even if they have not previously applied for waiver under the Department of Education’s borrower defense program, which offers cancellation to those who can prove they have been ripped off or misled by their colleges.

There may be former ITT Tech students with outstanding debts who do not qualify because they attended the school before January 2005.

It’s unclear how soon borrowers will be informed about whether their debt will be forgiven. The Department of Education must first notify a borrower’s student loan administrator before processing the cancellation.

Speaking to reporters Tuesday, department officials would not provide an exact timeline for ITT Tech students. But some former Corinthian College students, who received debt relief in June, have already forgiven their debt, said Richard Cordray, head of Federal Student Aid.

He added that eligible ITT Tech borrowers will no longer have to pay anything for their loans, even if the pandemic-related pause on payments expires before they receive full cancellation. The federal loans borrowed to attend ITT Tech remain tolerant.

The Department of Education also announced Tuesday that it has formally notified DeVry University that it must pay millions of dollars for previously approved student debt waivers for about 1,800 of its students. DeVry University is still operating and the government wants to recover the cost of the institution’s student loan waiver. It’s hard for the government to get money back from colleges like ITT Tech that have already closed their doors, Cordray said.

Biden weighs broad waiver of student debt

Biden is expected to announce in late August whether he will more broadly waive student loans for the 43 million borrowers of federal student loans.

Key Democratic lawmakers, including Senate Majority Leader Chuck Schumer and Massachusetts Senator Elizabeth Warren, have called on Biden to give up $50,000 per borrower. But Biden has consistently pushed back to cancel so much, suggesting he would support wiping out $10,000 per borrower, in line with a pledge he made on the campaign trail in 2020.

Biden has so far taken a more focused approach to student debt relief. His government has so far authorized the cancellation of nearly $32 billion — more than any other government — largely for borrowers scammed by their profitable colleges and for permanently disabled borrowers.
He has also temporarily expanded the public loan forgiveness program, which forgives the debts of government and nonprofit employees after 10 years of payments, and made changes to means-tested repayment plans, bringing millions of borrowers closer to forgiveness.

Biden has also extended the pandemic-related pause on federal student loan payments several times. Borrower balances have effectively been frozen for more than two years, with no payments required on most federal student loans since March 2020 — when the coronavirus pandemic put many Americans on lockdown. During this time, interest has ceased to accrue and collections on defaulted debts have been suspended.

The break ends on August 31, but Biden has yet to decide whether to extend it again.

Americans’ attitudes toward student debt relief are deeply divided along party and generational lines.

A majority of Democrats in a May CNN poll (56%) — and an even larger majority of self-proclaimed liberals (69%) — say the government is underspending on student loans, while only a third of Republicans and Self-proclaimed conservatives say the same.

This story has been updated with additional information.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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