According to media outlets, and those in the know, the Biden Administration is extremely close to announcing an executive order to cancel up to $10,000 in federal student loan debt for all who currently owe. However, the 46th president has already enacted massive orders canceling student loan debt for plenty of borrowers. Just three weeks ago, he canceled nearly $6 billion for borrowers who attended Corinthian colleges. Now, he plans to wipe the slate for even more college students.
This news doesn’t cover all student loan borrowers, but that official announcement could come any day now. Instead, this plan covers students who took out loans from colleges they say defrauded them out of money. The Associated Press reported that the student lawsuit began during Trump’s time in office. Now that the Biden Administration is following through with the suit, it will allow more than 200,000 students the opportunity to have up to $6 billion in student loans wiped clean from their debt.
The act was officially filed Wednesday, June 23rd, in a San Francisco federal court. Students who were enrolled in 150 various colleges filed the lawsuit, claiming their schools had misled them into obtaining massive amounts of student loan debt. Nearly every single institution was a for-profit college. The list included popular names like DeVry University, the University of Phoenix, and the ITT Technical Institute. Many of those that made the list have permanently ceased operations in recent years.
After the lawsuit first made its way to the court system, students filing the petition claimed that at the time education secretary Betsy DeVos had purposefully halted the claims from going through. After allegedly stalling the claims for months on end, the department of education denied tens of thousands of them. The judge overseeing the case has since criticized the former education secretary, claiming her decisions left student loan borrowers “out to dry.”
The Biden Administration has long promised to reverse the Trump-era rulings that failed to address fraud in the student loan sector. The Public Service Loan Forgiveness program is another initiative that had long failed student loan borrowers. To combat this, Biden enacted the Limited PSLF Waiver, making it possible for the Education Department to count past periods of repayment that were rejected under original rulings. Earlier this year, the endeavor canceled debt for 100,000 more students.
For the schools accused of defrauding students into student loans, the evidence is quite incriminating. Attorney generals say that many of the schools, such as DeVry, sold college goers high-interest student loans founded on false promises and lies. These colleges and universities marketed their institutions on claims that 90% of graduates were guaranteed to find jobs in their field within six months. Following a federal investigation, it was uncovered that only about half of graduates actually obtained jobs in their field afterward.
While the Biden administration has already promised to approve these student loan refunds, the proposal is not a done deal quite yet. The deal has yet to be approved by the federal judge overseeing the matter, although he is suspected to approve the case. A hearing on the proposal is now scheduled for July 28th.