$3.9 Billion More In Federal Loans Were Just Cancelled — Do You Qualify?
The United States Department of Education announced a new batch of student loan cancelations totaling another $3.9 billion in loan forgiveness.
The United States Department of Education announced a new batch of student loan cancelations. As of Tuesday, August 16th, the department will provide relief to 208,000 more people for another $3.9 billion in loan forgiveness. Here’s what you need to know.
Who qualifies for this round of student loan forgiveness?
According to AP News, borrowers who took out federal loans to attend the now-defunct ITT Technical Institute anytime from 2005 until the school’s closing in 2016 will see their student debt canceled. The forgiveness will be automatic, the Biden administration noted in an announcement. The cancelation comes after authorities found “widespread and pervasive misrepresentations” at the for-profit college chain.
The loan forgiveness is moving forward using the “borrower defense to repayment provision,” a federal rule meant to protect people from colleges making false claims in advertising or engaging in other forms of fraud.
“The evidence shows that for years, ITT’s leaders intentionally misled students about the quality of their programs in order to profit off federal student loan programs, with no regard for the hardship this would cause,” said Education Secretary Miguel Cardona, per AP News.
According to CNBC, the Biden administration has approved debt cancelation using the borrower defense provision to the tune of $32 billion for 1.6 million borrowers. The cancelation before this was the largest, wiping out $5.8 billion in student loans for 560,000 people who borrowed funds to attend Corinthian College.
“The Biden-Harris Administration will continue to stand up for borrowers who’ve been cheated by their colleges, while working to strengthen oversight and enforcement to protect today’s students from similar deception and abuse,” Cardona added, per CNBC.
However, President Joe Biden hasn’t decided on a path forward in his promise to tackle student loan debt as a whole. Last month, he said a decision as to how much debt he would cancel, for whom, and if payments would resume would be announced at the end of August. Rumors suggest the plan to forgive student loans will include some form of income cap — rumored to be set at $150,000 for single-filers — and that $10,000 of debt will be canceled per person.
As the end of August looms, the federal government reportedly told loan servicers not to send out student loan bills to borrowers ahead of when the scheduled freeze date on student loan repayment ends. This move has people speculating that the loan pause might be extended a fifth time.