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ED Forgives Student Loans for Thousands of Borrowers, Provides Updates on Targeted Student Loan Relief

By Hugh T. Ferguson, NASFAA Senior Staff Reporter

The Department of Education (ED) announced the approval of $415 million in borrower defense claims on Wednesday, citing new findings that come as a part of a continuing review of claims from institutions that have demonstratively misrepresented their course offerings and outcomes for graduates.

According to ED, this action — which includes nearly 16,000 borrowers — brings the total amount of approved relief under borrower defense to repayment to approximately $2 billion for more than 107,000 borrowers.

The loan discharge comes as ED works to modify regulations intended to hold institutions accountable for student outcomes and deter them from engaging in deceitful practices that the agency’s relaunched enforcement office could target.

“Students count on their colleges to be truthful,” said Education Secretary Miguel Cardona. “Unfortunately, today’s findings show too many instances in which students were misled into loans at institutions or programs that could not deliver what they’d promised.”

ED highlighted that DeVry University, Westwood College, the nursing program at ITT Technical Institute, criminal justice programs at Minnesota School of Business/Globe University, and over 11,900 students who attended institutions such as Corinthian Colleges and Marinello Schools of Beauty all administered practices that violated program standards and made false claims related to their programs.

According to ED, this borrower defense approval is the first instance in which such a claim has been awarded against an institution — DeVry University — that is still operational and admitting students. ED said it would seek to recoup the cost of the discharges from DeVry and that going forward ED would seek to hold schools that are still operating liable for borrower defense claims.

As a part of the approval process, ED said it anticipates that the number of approved claims related to DeVry will “increase as it continues reviewing pending applications.”

ED also underscored its commitment to implementing additional targeted relief for qualifying student loan borrowers through other regulatory actions. Officials committed to reworking the discharge programs, writing new borrower defense regulations, re-establishing gainful employment through the negotiated rulemaking process, and proposing “financial triggers” to enable ED to have monetary protections against potential losses.

ED Under Secretary James Kvaal and Federal Student Aid (FSA) Chief Operating Officer (COO) Richard Cordray participated in a call Wednesday afternoon detailing the announcement and said the Biden administration was committed to reaching all student loan borrowers who are eligible for loan discharges.

Cordray also said that it was the department’s hope that with Wednesday’s announcement other borrowers will have the opportunity to step forward to access relief.

In the notice, ED also indicated that additional approvals would likely be forthcoming and said it will approve subsequent applications that adhere to the demonstrated misconduct that was included in Wednesday’s announcement. According to ED, additional discharges may total more than $284 million and reach more than 11,900 students.

 

Publication Date: 2/17/2022


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