The Education Department is sending mass notices to borrowers who were approved for student loan forgiveness as a result of alleged school misconduct. Hundreds of thousands of borrowers will not have to pay back their student loans under a group discharge initiative.
“The Department of Education… has determined that the loan(s) you received… are eligible for full loan discharge,” says an email sent to thousands of borrowers. “This means the remaining balance on the loan(s) will be forgiven. You do not have to make any more payments on the loan(s).”
Here’s what borrowers should know.
Student Loan Forgiveness Due to School Misconduct
The Biden administration is providing the mass student loan cancellation relief through Borrower Defense to Repayment, a program designed to remedy school misconduct related to false promises about core elements of educational programs.
In June, the administration announced that 560,000 borrowers who attended Corinthian Colleges would receive automatic student loan forgiveness through Borrower Defense to Repayment, regardless of whether or not they requested relief or submitted a formal Borrower Defense application. The national chain of for-profit schools, which collapsed in 2015, was accused of intentionally misrepresenting job placement rates and engaging in false advertising.
“Every student deceived, defrauded, and driven into debt by Corinthian Colleges can rest assured that the Biden-Harris administration has their back and will discharge their federal student loans,” said U.S. Secretary of Education Miguel Cardona in a statement accompanying the June announcement.
Then in August, the Biden administration announced that another 200,000 borrowers who attended ITT Technical Institutes would receive automatic student loan forgiveness, as well. Like Corinthian, ITT was accused of widespread misconduct related to admissions and job placement rates before it collapsed in 2016. Borrowers who attended ITT from January 1, 2005 through its closure in September 2016 would be eligible for group discharge relief, even if they did not submit a formal Borrower Defense application.
The mass emails being sent out to thousands of borrowers this week indicate that the Education Department is making progress in implementing its promise to wipe out the federal student loan debt for these and other borrowers who attended predatory institutions.
What Borrowers Should Know About The Automatic Student Loan Forgiveness
In addition to student loan forgiveness, borrowers who are eligible for relief through this automatic group discharge process may also receive refunds of past payments made on those loans. And borrowers’ credit reports should be updated to reflect the discharges once they are processed.
“You also may receive a refund for prior payments made to the Department on your discharged loan(s),” says the Education Department email. “Your servicer will let you know if you are eligible for a payment refund, which would be mailed to you…. Your credit report will also be updated to reflect this discharge when it is complete.”
The Education Department encourages borrowers to update their mailing address to ensure that they receive important correspondence, as well as refund checks.
“Please check your online account with your loan servicer to ensure your address is correct so you can receive any refund,” says the Education Department. “Otherwise, you do not have to take any further action to receive your discharge.”
Borrowers can get their current loan servicer’s contact information by logging into their Department of Education portal at StudentAid.gov.
Payments For Applicable Loans Will Be Suspended Even After Student Loan Payment Pause Ends
It may still take some time for the discharges to take full effect, but the Education Department indicates that the applicable loans will remain in an administrative forbearance, with no payments due, until the discharge is completed. This means that even if the ongoing student loan payment pause ends on December 31, these borrowers will continue to have their payments suspended.
Separately, the Biden administration is also considering an extension of the ongoing student loan pause for all borrowers with government-held federal student loans.
Relief is Distinct From Other Student Loan Forgiveness Initiatives
Importantly, this latest round of student loan forgiveness is entirely distinct from other recent relief announced by the Biden administration, including the following:
- $6 billion in student loan forgiveness for hundreds of thousands of borrowers through a Borrower Defense to Repayment settlement finalized this week.
- The Limited PSLF Waiver, which ended in October 31.
- The IDR Account Adjustment, which may result in loan forgiveness of many borrowers who have been in repayment for a long time.
- Biden’s one-time student loan cancellation initiative, which is currently blocked by federal courts.