“A close review of these claims and the associated evidence showed these borrowers have been harmed and we will grant them a fresh start from their debt,” he added.
The change comes as top Democrats continue to push President Joe Biden to offer broader student loan debt relief — something the President has said he believes should be left to Congress.
Narrow relief for students at for-profit schools
The changed Department of Education policy provides debt forgiveness to students whose schools defrauded them, a principle known as “borrower defense.”
The forgiveness process was simplified during the Obama administration, when big for-profit colleges like Corinthian and ITT Tech were found to have misled students and shut their doors under federal pressure. The schools presented prospective students with inflated job placement numbers, for example.
At first, borrowers received 100% loan forgiveness if the Department of Education determined their school had committed fraud. But DeVos changed the calculation, resulting in only partial debt relief for eligible borrowers depending on their current incomes.
Some Democrats are pushing for broad debt forgiveness
The Biden administration’s change falls short of a more comprehensive revamp of the program that advocacy groups have been calling for.
“Abandoning partial relief is a strong start for a narrow subset of borrowers, but what we need from the Education Department is an overhaul of the current borrower defense process,” said Toby Merrill, Director of Harvard’s Project on Predatory Student Lending, which has sued DeVos over issues with the borrower defense rule.
In a press release, the Department of Education called the rule change a “first step” in addressing the borrower defense claims and said it would be pursuing additional actions.
But Biden, who has said he would support canceling $10,000 per borrower, has repeatedly resisted the pressure, arguing that the government shouldn’t forgive debt for people who went to “Harvard and Yale and Penn.”
The department already has some more targeted debt cancellation policies in place. It wipes away debt for defrauded students as well as disabled veterans. Biden could provide relief for hundreds of thousands of more borrowers just by expanding those programs, according to the National Student Legal Defense Network.