The processing of student loan forgiveness under key relief programs has recently stagnated, leaving tens of thousands of borrowers in limbo, raising concerns among advocates and borrowers alike. The Biden administration had previously approved over 700,000 borrowers for various forms of student debt relief, which included refunds for prior payments and rectified credit reporting, mainly targeting those who were defrauded by their educational institutions or adversely affected by school closures. Despite these approvals, many borrowers who were notified of their eligibility for full discharge of federal student loans have yet to receive the promised forgiveness, leading to increasing frustration among affected individuals and advocates.
Advocates are urging the Biden administration to expedite the relief process for approved borrowers while also extending support to other borrowers facing similar predicaments. They fear that the incoming Trump administration may not prioritize or recognize the need for such relief, raising the stakes for current efforts. The primary avenues for student loan forgiveness under consideration include the Borrower Defense to Repayment program and the Closed School Discharge program, both of which allow borrowers to seek discharges based on fraud and institutional misrepresentations or in the event of a school’s closure while they were enrolled. The urgency of these requests has gathered momentum as time runs short before a possible change in administration.
The Biden administration executed a collective discharge authority, facilitating large-scale approvals for former students of two significant for-profit institutions: Corinthian Colleges and ITT Technical Institutes. In 2022 alone, the Education Department announced blanket debt forgiveness for 560,000 borrowers from Corinthian Colleges, and an addendum in 2023 extended this assistance to an additional 208,000 borrowers from ITT Technical Institutes. Even students who did not individually apply for borrower defenses or discharges could still qualify under these mass discharge protocols. However, an alarming number of those approved, specifically at least 145,000 Corinthian College attendees, remain without their loan discharges as the end of the administration approaches.
Advocates continue to underscore the need for the Biden administration to not only finalize the processing of relief for those already approved but also to broaden the criteria for student loan forgiveness to include other groups impacted by fraudulent or harmful practices from educational institutions. Senator Dick Durbin highlighted this issue, noting that while only 8% of American college students attend for-profit schools, they represent a staggering 30% of all student loan defaults. Advocates advocate that the government must combat the predatory practices those institutions utilize, emphasizing the need for debt relief for affected borrowers.
The coming weeks are keenly anticipated, with advocates focused on implementing approved debt relief while seeking new opportunities for expanded forgiveness for additional defrauded borrowers. The Project on Predatory Student Lending has publicly stated the urgency they feel in ensuring that promised relief is delivered promptly. By organizing alongside legislators such as Senator Durbin and Senator Ed Markey, advocates are pushing for timely action from the Biden administration, as the window of opportunity diminishes before a potential shift to less favorable policies under the incoming Trump administration becomes a reality.
Concerns are not unfounded, as there’s widespread belief that the incoming Trump administration may not support expansive student loan forgiveness or create pathways for relief for defrauded borrowers. During Trump’s previous administration, regulations were established that severely limited Borrower Defense to Repayment remedies, imposing higher evidential burdens on applicants and leading to many denied applications. Critics assert that his administration engaged in unlawful stalling under these programs, prompting class-action litigation from borrowers. While the Biden administration sought to implement more borrower-friendly regulations, ongoing legal challenges against these measures leave many unresolved claims in limbo, raising the specter of resurrecting the more stringent Trump-era standards in the absence of favorable new policies. Advocates contend that the current situation necessitates swift, determined action to avert a resurgence of a harmful framework for student loan borrowers hurt by deceitful educational practices.
