The administration of President Joe Biden has agreed to write off some $6 billion in federal student loan debt for up to 264,000 borrowers who say they have been scammed by colleges.
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The agreement, which must be approved by the judge, will serve to put an end to the process initiated by a class action lawsuit by seven students who in 2019 denounced the Donald Trump government for the alleged mishandling of the Debtor Defense Reimbursement program under the secretary of Education, Betsy Devos.
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The program, which with Devos accumulated delays and unjustified denials, allows debtors of federal student loans to request forgiveness of their debt if they had been tricked into enrolling or staying in an academic program with false promises in key aspects.
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With the agreement between the plaintiffs and the Department of Education, according to CNN, they will be about 200,000 who will see the entire debt automatically canceled with a list of more than 150 academic institutions that the government considers involved in bad practices. Another 64,000 could benefit but will have to process their application.
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“This momentous settlement proposal will provide answers and certainty to debtors who have fought for so long for a fair resolution of their borrower defense claims after being misled by their schools and ignored or rejected by their government,” he said. Eileen Connordirector of the Harvard Predatory Lending Project and representative of the plaintiffs in the class action.
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About 43 million Americans have student debt
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In addition to extending the payment moratorium introduced during the coronavirus pandemic until August 31, the White House had previously approved the forgiveness of some $25 billion for some 1.3 million borrowers.
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Earlier this month, in fact, he announced debt cancellation for hundreds of thousands of students who attended the Corinthian Colleges chain of schools, from its founding in 1995 until its collapse in 2015.
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In that instance alone, $5.8 billion were forgiven to more than 560,000 debtors, the largest cancellation in the history of the Department of Education. In its heyday, Corinthian was one of the largest for-profit educational institutions in the country.
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An estimated 43 million Americans have federal student loan debt.
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During the election campaign, President Biden was in favor of forgiving $10,000 in student loans for all borrowers. But from the Democratic ranks they have pressured it to be $50,000 or in full, as Senator Elizabeth Warren has defended.
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A decision on the measure is expected to arrive before next August 31 when the moratorium ends, just over two months before the mid-term elections.
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