U.S. Secretary of Education Cancels $1B of Student Debt
Author: Andres Fernandez – March 22 , 2021 – 10:35am – 5 min read
Story In A Glance
- DOE officials said they will smooth shape relief for borrowers with verified claims of defraud by universities.
- The change is within the formula that is calculated by former Secretary of Education Betsy DeVos
On Thursday, the U.S. Department of Education has announced its new plan to help borrowers tackle their debt from federal student loans.
Within the new process, borrowers who have approved claims that confirm their college or institution defrauded them or engaged in financial misconduct will be able to apply for full relief.
Officials estimate that this could help about 72,000 borrowers receive $1 billion in loan cancellation.
Side note: Isn't crazy how only 72,000 borrowers equal to $1 billion dollars in loans? Okay back to the story.
According to Secretary of Education, Miguel Cardona said, ” Borrowers deserve a simplified and fair path when they have been harmed by their institution’s misconduct. A close review of these claims and the associated evidence showed these borrowers have been harmed and will grant them a fresh start from their debt.”
The Department of Education will be instating a new formula that is used to calculate the relief, and will replace the old formula that was used by former Secretary of Education Betsy DeVoS under the Trump Administration. And the new formula is to ensure borrowers with verified claims against a U.S. school will have complete loan forgiveness.
The DOE will grant full relief of related federal student loans, reimburse amounts paid on the loans, request credit bureaus to remove negative reporting associated with the loan, and reinstate federal student aid eligibility for eligible borrowers.
This new approach is akin to the borrower’s defense, a legal caveat that protects student borrowers against fraudulent schools and colleges. A department spokesperson confirmed to The Hill that this was frequently used during the Obama Administration, primarily with cases relating to claims of Corinthian College students.
