US President Joe Biden on December 3, 2024. Borrower advocates are urging the Biden administration … [+]
Student loan forgiveness processing appears to have stalled for tens of thousands of borrowers under a key debt relief program. And advocates are getting worried.
The Biden administration had approved more than 700,000 borrowers for student debt cancellation and other benefits, including refunds of prior payments and corrected credit reporting. The approvals were enacted using group discharge authority for borrowers who were allegedly defrauded by their school or impacted by school closures. But years after borrowers received notifications that they qualify for a complete discharge of their federal student loans, many are still waiting on loan forgiveness.
Meanwhile, advocates for student loan borrowers are calling on the Biden administration to not only hasten relief for those who were already approved for student loan forgiveness, but to also do everything possible to alleviate the student debt burdens of other similarly situated borrowers, as well. Advocates are concerned that the incoming Trump administration will not be inclined to grant any relief.
Student Loan Forgiveness Through Borrower Defense To Repayment And Closed School Discharges
The Biden administration had approved hundreds of thousands of borrowers for student loan forgiveness through the Borrower Defense to Repayment and Closed School Discharge programs. Borrower Defense provides a pathway for former students to request a discharge on the basis that their school engaged in misrepresentations or fraud. The Closed School Discharge program can wipe out the federal student debt for borrowers whose school closed while they were enrolled.
The administation exercised group discharge authority to approve, en masse, borrowers who had attended two collapsed for-profit institutions. In 2023, the Education Department announced that it would grant federal student loan forgiveness to 560,000 borrowers who had attended Corinthian Colleges. And in 2023, officials announced that an additional 208,000 borrowers who went to ITT Technical Institutes would receive debt cancellation, as well. Borrowers could qualify even if they did not submit a Borrower Defense or Closed School Discharge application.
But as the Biden administration winds down, many borrowers who were approved for these discharges are still waiting on relief. At least 145,000 former Corinthian students who were approved for a discharge still have not received student loan forgiveness, according to the Project on Predatory Student Lending.
“We definitely want to make sure the Biden administration finishes the work they started,” said Ashley Harrington, Senior Director of Policy and Advocacy for the Project on Predatory Student Lending, in a statement to the Washington Post last month. “There are a number of group discharges that are not complete.”
Advocates Call On Biden Administration To Implement And Expand Student Loan Forgiveness For Defrauded Borrowers
Borrower advocates and their allies in Congress are calling on the Biden administration to finish discharging the debts for borrowers who have already been approved for student loan forgiveness, and expand relief to other groups of borrowers who were also defrauded by their schools.
“8 percent of American college students go to for-profit schools. They account for 30 percent of all student loan defaults,” said Sen. Dick Durbin (D-IL) in a floor speech this week. These “Predatory higher education schools that are deceiving and swindling students and burying them in mountains of debt” engage in unfair or deceptive recruitment tactics, said Durbin, and borrowers should receive relief.
Several advocacy organizations for student loan borrowers urged the Biden administration to not only finish implementing approved debt relief, but to use the next several weeks to expand student loan forgiveness for other groups of borrowers allegedly harmed by school misconduct, before the Trump administration takes over in January.
“The coming weeks are pivotal, and we are focused on two things,” said the Project on Predatory Student Lending in a statement last week. “First, everyone who was promised relief, must receive their relief. Second, the Department must issue more group discharges for people who went to predatory schools.”
Several groups, including the Debt Collective and the Student Borrower Protection Center, will join Senator Durbin, Senator Ed Markey (D-MA), and other officials on Wednesday at a press conference to call on the Biden administration to maximize debt relief.
“The Biden-Harris administration has only fifty days left of its administration before President-Elect Trump takes office,” said the Debt Collective in a statement this week. “President Biden and Vice President Harris have eliminated federal student debt for millions of borrowers who were taken advantage of by predatory for-profit schools like Corinthian and ITT Tech. But there is much more that can and must be done before January 20th.”
Trump Administration May Not Pursue Expansive Student Loan Forgiveness For Defrauded Borrowers
The urgency of many advocates is due to the widespread belief that the incoming Trump administration will not be particularly interested in providing broad student loan forgiveness or other relief to borrowers who were harmed by school misconduct.
During Trump’s first term, the Education Department enacted new regulations for the Borrower Defense to Repayment program that imposed new limits and restrictions for relief, and increased the burden of proof for applicants. Advocates also accused the Trump administration of illegally stalling or arbitrarily denying student loan forgiveness applications under the Borrower Defense program, resulting in a class action lawsuit.
The Biden administration enacted new, more borrower-friendly regulations for the Borrower Defense and Closed School Discharge programs last year. These new rules were intended to replace the more restrictive Trump-era regulations. But the new Biden rules have been blocked by a federal appeals court following a legal challenge, and that court signaled that the regulations may ultimately get struck down. That would leave in place the earlier Trump-era regulations. In the meantime, the Education Department has not processed many Borrower Defense applications while the legal battle continues.
“We must not forget that in his first administration, Trump’s Department of Education ignored federal law and refused to cancel the debts of students defrauded by their schools,” said the Student Borrower Protection Center in a statement last month. “Trump’s Consumer Financial Protection Bureau adopted a ‘pencils down’ approach, curtailing enforcement and civil penalties against bad actors. When states stepped in to protect their residents from unlawful student loan servicers, the Trump Administration argued that federal law barred them from doing so. Donald Trump and his Project 2025 cronies have made clear that his second administration will build on this harmful track record.”