Biden administration writes off another $415 million student loan debt: Are you eligible?
If you borrowed federal student loans to attend a college that engaged in misconduct, you may be eligible for full debt forgiveness under the Borrower Defense Program until repaid.
On Feb. 16, the Biden administration approved borrower defense requests for an additional 16,000 borrowers, according to the Department of Education. This resulted in a $415 million rebate on federal student loans given to former students of several private colleges, including DeVry University.
“When colleges and vocational schools put their own interests ahead of those of students, we won’t look the other way.”
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Keep reading to learn more about borrower defense against repayment discharges and to determine if you qualify for this round of student loan forgiveness. If you don’t qualify for relief, you can consider other student loan repayment plans, such as refinancing a private loan at a lower interest rate. You can compare student loan refinance rates on Credible for free without affecting your credit score.
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16,000 defrauded students receive borrower defense waivers
Including student loan discharges approved on Feb. 16, more than 680,000 borrowers have received about $16 billion in debt forgiveness since President Joe Biden took office, the department said.
The most recent round of rebates includes $71.7 million in borrower defense releases for approximately 1,800 former DeVry University students. This is the first time the Education Department has approved borrower defense applications for a currently operating institution.
The department said DeVry “made substantial and widespread misrepresentations about his placement rates.” From 2008 to 2015, the private university misled prospective students by saying that 90% of graduates got jobs in their field within six months of graduation. In reality, that number was around 58%.
In addition to DeVry University, the Biden administration has approved thousands of borrower defense requests associated with several now-defunct colleges:
- ITT Technical Institute School of Nursing: $3.1 million in discharges for 130 borrowers
- Minnesota Business School/Globe University: $3 million in discharges for 270 borrowers
- Westwood College: $53.1 million in discharges for 1,600 borrowers
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Finally, 11,900 additional borrowers who attended institutions that had previously been investigated, such as Corinthian Colleges and Marinello Schools of Beauty, were approved for $284.5 million in student loan releases. this month.
“Students rely on the sincerity of their colleges,” Education Secretary Miguel Cardona said. “Unfortunately, today’s results show too many cases where students have been misled by loans from institutions or programs that have failed to deliver on their promises.”
The Department of Education expects it to approve even more borrower defense applications for former DeVry students as it reviews a backlog of pending applications. Cardona said the administration “remains committed to granting discharges to borrowers when evidence shows their college has violated the law and standards.”
If you don’t qualify for a borrower’s defense discharge, you may meet the eligibility criteria for other federal relief programs. You can also consider other debt repayment options, such as refinancing a student loan.
Refinancing your student loans at a lower rate can help you lower your monthly payments, pay off your loans faster, and save thousands of dollars over time. You can visit Credible to learn more about student loan refinancing, so you can decide if this strategy is right for you.
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What to do if you don’t qualify for Borrower Defense Releases
The Borrower Defense Program is only for students misled by their university, and such claims must be vetted by an Education Department investigation.
Almost all of the borrower defense requests were granted to students who were attending a private college that has already closed. The vast majority of student borrowers will not qualify for this program, so it may be worth considering your alternatives:
- Search other federal student loan forgiveness programs. The Biden administration paid off $7.8 billion in federal student debt for borrowers with total and permanent disabilities. It also provided nearly $5 billion in debt relief to 70,000 borrowers under the Public Service Loan Forgiveness Program (PSLF).
- Apply for additional federal benefits. Federal student loan borrowers can enroll in an income-based repayment (IDR) plan to limit their monthly payments to 10-20% of their disposable income. It may also be possible to defer your student loans for up to 36 months due to economic hardship or unemployment forbearance.
- Refinance at a lower rate. According to Credible, it may be possible to lower your monthly payments by more than $250 by refinancing a longer-term loan. Keep in mind that refinancing federal student loan debt into a private student loan will make you ineligible for certain protections, such as IDR plans, administrative forbearance, and forgiveness programs.
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Student loan refinance rates are still near record lows, which means you may be able to save more money than ever by refinancing your student debt. You can browse the current interest rates from private lenders in the table below and use Credible’s student loan calculator to estimate your potential savings.
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