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ED Approves $238 Million in Borrower Defense Claims

By Hugh T. Ferguson, NASFAA Staff Reporter

Due to documented widespread misconduct, the Department of Education (ED) has announced the discharge of $238 million in student loan balances from borrowers who attended a now-defunct beauty school.

Based on borrower defense findings, ED intends to deliver this relief for 28,000 borrowers who attended Marinello Schools of Beauty from 2009 through its closure in 2016. Additionally, the discharge will be extended to those borrowers who have not yet applied for a borrower defense claim.

“Today’s announcement will streamline access to debt relief for thousands of borrowers caught up in Marinello’s lies,” said Education Secretary Miguel Cardona. “At the Department of Education, we will continue to strengthen oversight and enforcement for colleges and career schools that engaged in misconduct and uphold the Biden-Harris Administration’s commitment to helping students who have been harmed.”

Among its findings, ED said Marinello made “widespread, substantial misrepresentations about the instruction that would be offered at its campuses across the country.” According to ED, the schools failed to train students, in some instances, how to cut hair and found that students were left without instructors for weeks or even months, failing to provide the level of education it promised. 

According to ED, this is the first group discharge for defrauded borrowers to be approved since 2017, following the Trump administration not approving any group claims or new findings.

As a part of the announcement, ED also highlighted that it has made four additional hires to the Office of Enforcement that was reinstated in October 2021 and aims to strengthen oversight of and enforcement actions against postsecondary schools that participate in the federal student loan, grant, and work-study programs.

 

Publication Date: 4/29/2022


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