Feds Cancel Student Debt for 160K New Borrowers
The U.S. Department of Education is canceling student debt for another 160,000 borrowers.
This latest cancellation, announced by the White House Wednesday (May 22), brings the total number of Americans who have received student debt relief from President Joe Biden’s administration to 4.75 million.
“Each of those borrowers has received an average of over $35,000 in debt cancellation,” Biden said in the announcement. “These 160,000 additional borrowers are people enrolled in my Administration’s SAVE Plan; are public service workers like teachers, nurses or law enforcement officials; or are borrowers who were approved for relief because of fixes we made to Income-Driven Repayment.”
Last month, the administration announced a plan that would cover 30 million borrowers. This group includes those who owe more now than when they started repayments due to interest, borrowers who entered repayment 20 or more years ago, students who attended schools that “failed accountability measures or failed to provide enrollees with sufficient financial value,” and borrowers facing financial hardships.
According to the administration’s announcement, the move is expected to deliver relief to Black and Latino borrowers, community college attendees and people who are financially vulnerable because they took out debt but never got the opportunity to complete their degree.
And earlier this month, the Education Department announced it had forgiven $6.1 billion in loans for Art Institutes graduates, saying those people were lied to by the now defunct chain of for-profit arts schools.
“The Art Institutes preyed on the hopes of students attempting to better their lives through education,” Federal Student Aid Chief Operating Officer Richard Cordray said at the time. “We cannot replace the time stolen from these students, but we can lift the burden of their debt. We remain committed to working with our federal and state partners to protect borrowers.”
The loan forgiveness comes in the wake of investigations by the attorneys general offices of Iowa, Massachusetts and Pennsylvania into the Art Institutes and parent company Education Management Corporation (EDMC) which found the school misled students about their post-education job prospects.
Also this month, the Consumer Financial Protection Bureau (CFPB) filed a complaint against the National Collegiate Student Loan Trusts and Pennsylvania Higher Education Assistance Agency (PHEAA), alleging that they ignored borrowers seeking payment relief.
“The CFPB has taken action against a web of investment trusts that failed student loan borrowers, including at the height of the pandemic,” the agency said in the release. “Our law enforcement action makes clear that investors cannot sidestep accountability by playing games of corporate musical chairs.”
A spokesperson for the PHEAA told PYMNTS the association maintains it had no authority to decide on unique borrower requests without instruction during the years in question, but said it was pleased to have brought “this multi-year review by the CFPB to a resolution.”
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