Students whose schools closed are getting a break on their student loans.
The Department of Education announced Thursday that it will forgive $150 million in federal student loan debt from closed for-profit colleges.
The policy, put in place by the Obama administration, created regulations to protect borrowers who attended or recently withdrew from a closed college. They are able to cancel their debt as long as they did not transfer their credits to a different school.
The Education Department will cancel the federal loans of 15,000 students. Those who qualify for the benefit will be notified via email starting Friday. Borrowers will not have to take additional steps to receive their payment, but processing the claims could take about 90 days.
DeVos has argued against the “borrower defense” regulation because, under the rule, she says it is too easy for students to have their debt forgiven, which is unfair to the taxpayer and colleges.
Before the regulation was launched in 2016, borrowers had to submit an application to get their loans forgiven. The intent of the rule was to make the repayment automatic since few were applying for the benefit.
She is planning to propose a more restrictive policy that would cap the amount of debt relief students receive in these situations.
A federal judge in September, however, ruled that DeVos’ efforts to thwart the 2016 Obama guidelines were illegal. The same judge also ruled in October against for-profit colleges that tried to argue for the immediate halt of the regulation’s implementation.
Half of borrowers affected attended colleges owned by Corinthian College, which went bankrupt in 2015. The rest of the students attended schools that shut down between Nov. 1, 2013 and Dec. 4, 2018.
Sen. Patty Murray, D-Wash., ranking member of the Health, Labor, Education and Pensions Committee said, “It’s disappointing that it took a court order to get Secretary DeVos to begin providing debt relief to students left in the lurch by predatory for-profit colleges.”
She added, “This is a good first step, but it’s not good enough.”
Sen. Murray’s office said that there are still more than 100,000 outstanding claims against these institutions.
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