Biden administration cancels another $415M in student loan debt: Do you qualify?
Nearly 16,000 borrowers will receive $415 million in student loan cancellation after the Education Department approved a round of borrower defense claims on Feb. 16. (iStock)
If you borrowed federal student loans to attend a college that engaged in misconduct, you may be eligible to have your debt fully discharged under the borrower defense to repayment program.
On Feb. 16, the Biden administration approved borrower defense claims for an additional 16,000 borrowers, according to the Department of Education. This resulted in $415 million worth of federal student loan forgiveness extended to former students of several private colleges, including DeVry University.
- Richard Cordray, Federal Student Aid Chief Operating Officer
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Keep reading to learn more about borrower defense to repayment discharges, and determine if you're eligible for this round of student loan forgiveness. If you don't qualify for relief, you may consider your alternative student loan repayment plans, such as refinancing to a private loan at a lower interest rate. You can compare student loan refinancing rates on Credible for free without impacting your credit score.
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16,000 defrauded students receive borrower defense discharges
Including the student loan discharges approved on Feb. 16, more than 680,000 borrowers have received approximately $16 billion worth of debt forgiveness since President Joe Biden took office, the department said.
The most recent round of forgiveness includes $71.7 million in borrower defense discharges for about 1,800 former DeVry University students. This is the first time the Education Department has approved borrower defense claims for a currently operating institution.
The department said that DeVry "made widespread substantial misrepresentations about its job placement rates." From 2008 to 2015, the private university misled prospective students by saying that 90% of graduates got a job in their field within six months of graduation — in reality, that number was around 58%.
In addition to DeVry University, the Biden administration approved thousands of borrower defense claims associated with several now-defunct colleges:
- ITT Technical Institute Nursing School: $3.1 million in discharges for 130 borrowers
- Minnesota School of Business/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, an additional 11,900 borrowers who attended institutions that were previously investigated, such as Corinthian Colleges and Marinello Schools of Beauty, were approved for $284.5 million worth of student loan discharges this month.
"Students count on their colleges to be truthful," said Education Secretary Miguel Cardona. "Unfortunately, today’s findings show too many instances in which students were misled into loans at institutions or programs that could not deliver what they’d promised."
The Education Department anticipates that it will approve even more borrower defense claims for former DeVry students as it reviews a backlog of pending applications. Cardona said that the administration "remains committed to giving borrowers discharges when the evidence shows their college violated the law and standards."
If you don't qualify for a borrower defense discharge, you may meet the eligibility requirements for other federal relief programs. You can also consider your alternative debt repayment options like student loan refinancing.
Refinancing your student loans to a lower rate may help you reduce 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 discharges
The borrower defense program is reserved for students who were misled by their university, and these claims must be approved through an investigation by the Education Department.
Almost all borrower defense claims were granted to students who attended a private college that has already closed. The vast majority of student loan borrowers won't qualify for this program, so it may be worthwhile to consider your alternatives:
- Research other federal student loan forgiveness programs. The Biden administration has discharged $7.8 billion worth of federal student debt for borrowers with a total and permanent disability. It's also extended 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-driven repayment plan (IDR) 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 through economic hardship or unemployment forbearance.
- Refinance to a lower rate. It may be possible to reduce your monthly payments by more than $250 by refinancing to a longer-term loan, according to Credible. Keep in mind that refinancing federal student loan debt into a private student loan will make you ineligible for select protections, such as IDR plans, administrative forbearance and forgiveness programs.
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Student loan refinancing rates are still hovering near record lows, which means you may be able to save more money than ever by refinancing your student debt. You can browse 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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