The Biden administration has offered to forgive approximately $6 billion in federal student loan debt for around 200,000 students who believe their college cheated them. Previously, the government authorized $25 billion in debt forgiveness for 1.3 million debtors. There are over 43 million Americans who have federal student loans.

What is going on?

Many of the new agreement’s borrowers have been waiting long for the Department of Education to review their claims under a process known as debtor defense to repayment. Borrowers who think their institution deceived them, frequently by overstating job placement statistics or the process of transferring courses, can apply for federal student debt relief.

In 2019, seven debtors launched a class-action lawsuit against the department for handling the claims. Processing of the applications slowed under the previous Education Secretary, Betsy DeVos. However, the Biden government has been working to reduce the backlog.

The Project on Predatory Student Lending at Harvard Law School, which represented the borrowers, negotiated an agreement with the Department of Education. About 200,000 debtors will immediately get complete debt relief when the arrangement is forced. Those eligible debtors attended institutions where the agency has already identified wrongdoing warranting debt reduction, such as The Art Institute and ITT Tech.

Student Loans

The Biden government is sticking to its promise to erase student debts for millions of students. The Education Department will grant complete student debt cancellation to about 200,000 student loan debtors deceived by their institution or university as part of a settlement deal in a class-action lawsuit. Borrowers will also receive a reimbursement of their student loan payments and the removal of any linked bad points from their credit records. It’s a massive victory for student loan debtors looking for student loan settlements for years.

The revelation comes at a pivotal point in which President Joe Biden is considering large-scale student debt forgiveness for millions of students. The first class-action case comprised 264,000 student loan debtors attending more than 150 colleges and universities, such as the University of Phoenix and DeVry.

Debt reduction that is targeted

So far, the Biden government has chosen a patchwork approach to erase federal student loans. It has previously taken billions of dollars from other borrowers duped by their universities, including $5.8 billion from 560,000 debtors who joined the for-profit Corinthian Colleges chain, which went bankrupt in 2015.

The administration has also briefly enlarged eligibility for the Public Service Loan Pardoning program, eliminating leftover governmental student loan debt after ten years of eligible payments by a federal or non-profit worker. So far, the expansion has resulted in the termination of $6.8 billion in loans for over 113,000 debtors.

In addition, the Biden government has stepped up to improve current income-driven repayment arrangements, putting millions of debtors closer to debt relief.

Over $8.5 billion in debt has also been automatically erased for over 400,000 debtors who were permanently incapacitated and previously qualified for debt relief but did not apply.

How can you tell whether you’re qualified?

You are not required to do anything to participate in the Sweet v. Cardona class-action lawsuit case. If you filed a borrower defense request before or on June 22, 2022, but have not gotten a decision or a form rejection in or after December 2019, you are a member. There is no fee to join the class action case, and debtors from any schools named are eligible.

As of June 22, 2022, 264,000 people in the class have a pending debtor defense application. Approximately 200,000 participants visited one of the 150 colleges mentioned below and will receive a complete cancellation of their debts, a refund of their payments, and credit restoration. The Department of Education has discovered considerable evidence of misbehavior at several colleges and a high number of debtor defense applications from these schools.

The remaining 64,000 students in the class went to schools that were not on the list. Depending on how long their petitions have been outstanding, they will get customized judgments on their debtor defense applications within flexible timeframes.

How to Request for Debtor Defence for Repayment of Student Loans

You would need your Federal Student Aid ID, institution name and course of study, enrolment dates, and proof to support why you feel you are qualified for borrower defense to apply for borrower defense. You can register online or by completing a PDF and mailing it via email or regular mail. The application process will take around half an hour.

Contact the Department of Education’s debtor defense helpline at 1-855-279-6207 for further information on the progress of your application. You may reach someone from 8 a.m. to 8 p.m. ET Monday through Friday.

There is a local pool of debtors eligible for debtor defense, but it never hurts to apply and check whether you’re qualified if you feel your institution defrauded you.

Debtor defense to repayment allows you to receive partial or entire student debt forgiveness. If you do not qualify for debtor defense to compensation, keep in mind that there are other options for lowering your student loan payments, such as:

• Student loan refinancing (lower interest rate + lower price).
• Repayment based on income (lower payment)
• Forgiveness of student debts (federal student loans)

Biden is thinking about expanding student loan forgiveness.

After months of demands from fellow Democrats to annul $50,000 per debtor, President Joe Biden announced in April that he was exploring some broad student debt forgiveness, albeit at a lower sum.

On the campaign trail, Biden said he would approve $10,000 in forgiveness. According to White House officials, he is also considering establishing an income threshold to exclude high-earning debtors from debt relief.

The judgment is likely before August 31, when the virus outbreak-related moratorium on governmental student loan payments expires.

While widespread student loan debt discharge may provide monetary assistance to millions of Americans, the ramifications of such a massive policy shift – intentional or not – are challenging. The measure, on its own, would do little to reduce the cost of education for future debtors or to assist someone who has already settled the cost of their degrees.

Here’s how student loan borrowers would react.

Several previous college students have told the media what it would mean for them if Biden canceled part of their student loan debt.

An educator with a student loan debt of $68,000.

Despite repeated payments, Lindsay Clausen’s student loan debt has risen from $40,000 to $68,000. Clausen earned her bachelor’s degree from the State University of New York at Potsdam. She opted to obtain her master’s in educational technology while substituting teaching. After a few years, she secured a job at the university as an effective instructional coordinator. Borrowers may be eligible for forgiveness after ten years of payments. Many debtors were not eligible for forgiveness even though they thought they were because they had the wrong type of federal loan or repayment plan.

The Biden government has temporarily enlarged the PSLF program to address previous borrowers’ issues. On the other hand, Clausen is suspicious after learning how few individuals have been credentialed thus far. “I’m not necessarily depending on it 100% because who knows what the future government will do,” she explained.

Student loan debt of $80,000 for a human resources representative

Monica Mitchell, 43, claims she borrowed $80,000 for “a brighter life that never materialized.” She registered twice at the now-defunct for-profit Vatterott College. In 2004, she earned an associate’s degree in computer programming, followed by a cosmetology degree five years later. Neither led to a better position, and she is now employed in human resources. Her debts became behind before the COVID-19 epidemic halted her student loan debt repayments.

The Biden government has stated that it will remove her debts from default and help her get back on track. She is dissatisfied that other institutions’ graduates have duped are not entitled to debt relief.

Meteorologist with a school loan debt of $61,000

Angel Enriquez borrowed almost $40,000 to get his bachelor’s degree in meteorology. He opted to seek a master’s degree after working as a meteorologist for around five years. He feels his second degree assisted him in landing his ideal job at the Bureau of Meteorology. Vice President Joe Biden believes debt relief will take ten years if some student debt is not canceled.

Photographer and social media consultant with a school loan debt of $7,000

Heather Daenitz studied horticulture and viticulture at Oregon State University, concentrating on grape cultivation and winemaking. She sometimes stopped attending school to work full-time and save money. She worked various jobs while studying as a university tour guide and in a wine tasting establishment. She eventually had to borrow $18,000 for her final year of college. Lauren Daenitz worked three jobs and depended on food assistance to pay for her college degree.

Her Pell award had run out by the point she reached her last year of college. She borrowed $18,000 in government student loans and placed the rest on credit. If Vice President Joe Biden forgives part of her student debt, she and her husband will use the money to put down on the house.

$150,000 in-school loan debt for an IT support specialist

Blake Goddard graduated from college with an $86,000 college loan debt and then borrowed $44,000 for his postgraduate program. He took two part-time jobs during college to help pay his rent and medical expenses after being identified with Type 1 diabetes. Finally, Goddard believes his education was worthwhile but not worth the money. Most of his work has been short-term contract jobs with little salary and inadequate health insurance. If Vice President Biden cancels $10,000 in student loan debt per debtor, Goddard calls it a “drop in the bucket.” However, he is ineligible for debt relief.

Disclosure

These are purely the opinions of the author based on observations and analysis of financial platforms and a study of public reviews and ratings on how Biden’s administration decided to forgive student educational loans worth 6 million dollars. Excerpts from various sources have been used to clarify the facts in this article. A glossary of all the sources used can be found at the end of the article. This article is for educational purposes only and is not financial advice.