The U.S. Department of Education canceled about $ 5.8 billion in outstanding student loans for more than 560,000 borrowers in the largest government loan forgiveness action to date, the department announced Wednesday.
The cancellation applies to all those who attended schools run by the late Corinthian Colleges, one of the largest for-profit education companies that filed for Chapter 11 bankruptcy in 2015.
Corinthian Colleges has faced several lawsuits since its founding in 1995, but perhaps the most notable is in 2013, when Vice President Kamala Harris sued Corinthian while she was California Attorney General for “misleading and false advertising and recruitment.” , among other charges, he said. the department.
“As of today, all students cheated, scammed and indebted by Corinthian Colleges can be sure that the Biden-Harris administration will turn its back on them and pay off their federal student loans,” the education secretary said. of the United States, Miguel Cardona, in a statement.
Qualified borrowers will also not have to fill out the application to receive the relief: it will be automatic and they are expected to be notified in a few weeks, the department said.
Wednesday’s news comes as the Biden administration sees a broader student loan forgiveness for millions of borrowers; so far, the administration has approved $ 25 billion in loan forgiveness for about 1.3 million borrowers.
While some politicians and economists praised the move as a step in the right direction to address the $ 1.7 trillion student debt crisis, millions of borrowers have yet to see relief and wonder when and if they will be forgiven. their loans.
Here’s what to expect with student loan forgiveness in the coming months:
The federal student loan break is likely to last until the end of 2022
White House officials are concentrating on the $ 10,000 cancellation for all borrowers earning less than $ 150,000 a year, CNBC reports, but the administration has yet to confirm those plans.
In April, the Department of Education extended the break in student loan repayments, interest, and collections until August 31, 2022, but Michelle Dimino, a senior leader in Third Way education policies, predicts that the payment pause will be extended again until the end. of the year, at least until after the midterm elections.
A recent Data for Progress and Rise survey found that voters may be less likely to vote in the medium term if the Biden administration does not provide adequate relief to borrowers.
Cardona and other senior Biden officials have also made it clear that they feel comfortable extending the break during interviews. “We will continue to monitor it,” Cardona told Cox Media Group in April. “Right now, we have August 31st and, as you’ve seen in the past, we’ve been comfortable moving that date if necessary.”
More borrowers could see relief sooner
In the meantime, however, Dimino hopes that the most defrauded borrowers will see their debt canceled or reduced soon, especially those with outstanding claims to defend the borrower or who meet the requirements for a closed school loan termination, which means that your school closed while you were enrolled, or was unable to complete the program due to closure.
“The only thing we can, and do, expect from this administration at this time is a continued and concerted effort to help the borrowers who are struggling the most and offer specific relief,” Dimino adds. “The Department of Education is really charging to overcome this backlog of scammed borrowers and give them the overdue relief to which they are entitled.”
See:
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