The Department of Education is sending out mass communications to borrowers who have been approved for student loan waivers for alleged misconduct at school. Hundreds of thousands of borrowers are not required to pay back their student loans as part of a group relief initiative.
“The Department of Education … has determined that the loans you received … are eligible for full loan relief,” said an email sent to thousands of borrowers. “This means the balance of the loan(s) will be forgiven. You do not have to make any further payments on the loan(s).”
Borrowers should know this.
Student Loan Forgiveness for Misconduct at School
The Biden administration is providing mass relief for student loan cancellations through Borrower Defense to Repayment, a program aimed at addressing school misconduct related to false promises about core elements of educational programs.
In June, the administration announced that 560,000 borrowers attending Corinthian Colleges would receive automatic student loan waiver through the Borrower Defense pending repayment, whether they filed for relief or filed a formal Borrower Defense application. The national chain of nonprofit schools, which collapsed in 2015, has been accused of intentionally misrepresenting placement rates and false advertising.
“Any student who is being deceived, cheated, and forced into debt by Corinthian Colleges can rest assured that the Biden-Harris administration is behind them and will service their state student loans,” Secretary of Education Miguel Cardona said in a statement, accompanying the June announcement.
Then, in August, the Biden administration announced that an additional 200,000 borrowers who attended ITT Technical Institutes would also receive automatic student loan waivers. Like Corinthian, before its collapse in 2016, ITT faced widespread misconduct related to admissions and job retention rates. Borrowers who visited ITT from January 1, 2005 through its September 2016 closure would be eligible for group layoff relief even if they had not made a formal loan application.
The mass emails sent to thousands of borrowers this week show that the Department of Education is making progress on fulfilling its promise to wipe out federal student loan debt for these and other borrowers who have visited predatory institutions.
What borrowers should know about automatic student loan forgiveness
In addition to student loan forgiveness, borrowers eligible for relief through this automatic group relief process may also receive refunds of previous payments made on those loans. And borrowers’ credit reports should be updated to reflect the relief as they are processed.
“You may also receive a refund for previous payments made to the Department for your redeemed loans,” the Education Department email said. “Your service provider will let you know if you’re eligible for a payment refund, which will be mailed to you … Your credit report will also be updated to reflect this relief when it’s completed.”
The Department of Education encourages borrowers to update their mailing addresses to ensure they receive important correspondence as well as refund checks.
“Please check your online account with your credit service provider to ensure your address is correct so you can receive a refund,” the Department of Education says. “Otherwise, you don’t have to take any further action to obtain your release.”
Borrowers can get the contact information of their current loan servicer by logging on to the Department of Education’s portal at StudentAid.gov.
Payments on applicable loans will continue to be suspended even after the student loan payment pause ends
It may be some time before the layoffs take full effect, but the Department of Education advises that the loans in question remain in an administrative forbearance with no payments due until the layoff is complete. This means that even if the current student loan disbursement pause ends on December 31st, these borrowers will continue to have their payments suspended.
Separately, the Biden administration is also considering extending the ongoing student loan pause for all federal student loan borrowers.
The relief differs from other student loan forgiveness initiatives
Importantly, this latest round of student loan forgiveness is completely different from other relief recently announced by the Biden administration, including the following:
More reading on student loan forgiveness
Court authorizes $6 billion in student loan forgiveness for 200,000 borrowers to resolve lawsuit
8 Signs Biden Might Actually Extend Student Loan Pause Again
Student Loan Forgiveness Status: 6 updates after multiple courts blocked relief
Can you apply for multiple student loan forgiveness programs? Yes – with some caveats