With college tuition on the rise, more and more students are graduating with an enormous amount student-loan debt. One school is offering an alternative.
The Education Department said Thursday it will cancel $150 million in federal student loan debt, despite Secretary Betsy DeVos’ efforts to overhaul the Obama-era policy.
DeVos proposed restricting “borrower defense” claims filed by former students whose schools closed or made false promises, but has to carry out regulations after court rulings sided with students.
Three months ago, a federal judge ruled that DeVos’ attempts to kill the 2016 regulations were illegal, Politico reported. The judge also rejected for-profit colleges’ bid to stop the policy in October.
The department said Thursday it will forgive loans for about 15,000 borrowers whose schools closed, preventing them from finishing their programs. About half of those borrowers attended Corinthian Colleges, a for-profit educational chain that closed its campuses in 2015. They will account for $80 million of the automatically discharged loans, while borrowers whose schools closed between Nov. 1, 2013, and Dec. 4, 2018, will account for the other $70 million.
Affected borrowers will begin receiving email notifications from the department on Friday, the department’s press release said. Discharges may take longer than 90 days to complete, however, and loan holders will tell borrowers what specific loans were forgiven.
Previously, DeVos argued that the debt forgiveness was too lenient, lacking sufficient borrower proof requirements. The department said proposed changes would reduce frivolous claims and allow colleges to respond to borrower allegations.
Citibank must now pay $6.5 million for allegedly harming borrowers with student loan servicing failures.
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