Story at a glance
- DOE officials said they will streamline relief for borrowers with verified claims of defraud by universities.
- The change involves recalibrating a formula used by former Secretary of Education Betsy DeVos.
On Thursday, the U.S. Department of Education announced its new plan to help tackle debt for those who borrowed federal money to pay for student loans.
In a new streamlining 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.
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“Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct,” said Secretary of Education Miguel Cardona. “A close review of these claims and the associated evidence showed these borrowers have been harmed and we will grant them a fresh start from their debt.”
The Department of Education will be replacing the previous formula used to calculate relief — used by former Secretary of Education Betsy DeVos under the Trump administration — and ensure that borrowers with verified claims against a U.S. school will have complete loan forgiveness.
The current Department of Education stated that after reviewing the formula used by the DeVos administration, “the Department determined that it did not result in an appropriate relief determination” for defrauded borrowers.
The Department of Education will grant eligible borrowers 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.
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.
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