WASHINGTON, DC – APRIL 30: U.S. President Joe Biden leaves the White House on April 30, 2024 … [+]
The Biden administration announced that greater than 300,000 borrowers will receive $6.1 billion in student loan forgiveness following the most recent omnibus cancellation for borrowers who attended schools that allegedly made widespread misrepresentations.
The group layoffs goal former students of the Art Institutes, a nationwide chain of for-profit colleges that largely closed last yr. Borrowers are eligible for automatic loan forgiveness and other relief, including refunds of prior payments.
“For more than a decade, hundreds of thousands of hopeful students borrowed billions to attend the Art Institutes, only to get lies in return.” “That ends today, thanks to the Biden-Harris administration’s cooperation with the attorneys general of Iowa and Massachusetts and Pennsylvania,” U.S. Secretary of Education Miguel Cardona said in a press release Wednesday. “We must continue to protect borrowers from predatory institutions – and work toward a higher education system that is affordable for students and taxpayers.”
Who is eligible for group student loan forgiveness?
The Department of Education accused the humanities institutes of “providing interested students with widespread and significant misrepresentations about employment rates, salaries and post-graduation career services” so as to persuade prospective students to enroll. The Art Institute’s parent company, Education Management Corporation (EDMC), sold the remaining Art Institute campuses in 2017 and people campuses ultimately closed last yr under separate ownership.
The Biden administration previously approved group layoffs for borrowers who attended Corinthian Colleges and ITT Technical Institutes, two other national chains of for-profit schools that closed amid allegations of widespread misconduct. The Biden administration relied on findings from state attorneys general — particularly in Massachusetts, Iowa and Pennsylvania — in its decision to approve this latest group layoff.
“Based on the evidence, the department concluded that the arts institutions spread widespread and pervasive material misrepresentations that misled students about the value they would receive from their education,” the department said in a press release opinion. These included false promoting about employment prospects and schools’ relationships with potential employers, in addition to inadequate careers services.
More than 300,000 borrowers will receive student loan forgiveness following the group layoff announcement. To qualify, borrowers should have enrolled on-campus at an arts institution between January 1, 2004 and October 16, 2017.
Borrowers are eligible for automatic student loan forgiveness – no application required
The Biden administration approved relief through Borrower Defense to Repaid, a federal debt relief program that permits borrowers to hunt student loan forgiveness for certain forms of educational misconduct.
Typically, borrowers must submit long, detailed applications with supporting evidence in the event that they want to seek borrower defense relief. The Ministry of Education would then conduct a person review and make a call. But the method can sometimes take years.
For former Art Institute students, borrower defense relief is automatic. No application for student loan forgiveness is required for borrowers covered by the group notice. This is comparable to the group layoffs approved for former students of Corinthian Colleges and ITT Technical Institutes.
“This group relief will provide automatic relief to borrowers harmed by Art Institutes’ actions, including borrowers who have not yet filed for borrower defense,” the department said in its announcement Wednesday. “The department will begin notifying eligible borrowers today that they are eligible for relief. Borrowers don’t have to do anything.”
Borrowers who qualify for student loan forgiveness will receive additional relief
In addition to student loan forgiveness, the department said officials will take motion to suspend payments on secured student loans to be certain that borrowers “do not experience further financial demands from them during the time necessary to process their discharges.” Loans can be suspended”.
Borrowers who qualify for loan forgiveness also can receive a refund for payments already made. The department can even be certain that credit trading lines are faraway from borrowers’ credit reports once discharges are processed, the announcement said.
The Department of Education has not provided a timeline for when secured borrowers will actually receive borrower defense relief. But it’d take some time. Many borrowers waited months for his or her student loans to be forgiven as a part of the relief provided by the Corinthian and ITT Groups. And 1000’s of borrowers are covered by the most recent Sweet v. Cardona The settlement agreement – one other group relief related to the borrower defense program – remains to be awaiting loan forgiveness greater than a yr after the settlement agreement was approved.
Meanwhile, the Biden administration’s attempts to make the Borrower Defense program more accessible to former students of predatory schools and to carry schools accountable for the associated student debt relief stalled last month. A federal appeals court upheld a preliminary injunction on latest borrower defense rules implemented last summer, suggesting those latest rules are more likely to be overturned. In that case, this system would depend on an older set of borrower protection rules put in place by the Trump administration, which could ultimately end in more borrowers being denied relief.
