With the news of the payment pause being extended, the outcome for wide-scale student loan cancellation is becoming more unclear. Will the extension pave the way to full cancellation or is it the beginning of the end for cancellation. But despite that, billions of student loans have been already cancelled by the Biden administration.
How Much Student Loans were Cancelled?
$1 Billion Cancelled for 72,000 Defrauded Borrowers
Biden has been tackling student loan cancellation, not in a wide-scale manner, but in a more targeted approach.
The very first instance in which Biden has enacted cancellation of some form was back in the middle of March of this year. 72,000 student loan borrowers who filed borrowers defense claims have benefited in $1 billion in loan cancellation.
Under Devos’ formula, approved student loan claims only received partial forgiveness, and Trump’s administration made it harder for claimants to get approved because of increased documentation or proof that their schools knowingly engaged in any misconduct.
Upon being appointed as Education Secretary, Miguel Cardona and the Department had determined that the previous methodology “did not result in an appropriate relief determination.”
“Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct,” said Secretary of Education Miguel Cardona. “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.”
$1.3 Billion Cancelled for 41,000 Borrowers with Disabilities
The second time student loans were cancelled happened at the end of March, and it helped student loan borrowers with total and permanent disabilities.
According to the announcement, “This action will help more than 230,000 borrowers. More than 41,000 of these borrowers who had $1.3 billion in loans reinstated will now get their discharges back, have any payments made during the COVID-19 emergency refunded, and will not be asked to submit earnings documentation. The other 190,000 borrowers who remain in their monitoring period will not be asked to submit earnings documentation. These income monitoring requirements will be waived for the duration of the COVID-19 emergency.”
41,000 has been helped, while the other 190,000 are still on their monitoring period. So the fate of their student loans is still up in the air because the income monitoring requirements being waived is highly dependent on the length of the pandemic.
If a decision were to be made that we are not in a COVID emergency anymore, they may not qualify for that waiver. But I believe that is changing. Anyway, $1.3 billion is still a big help to 41,000 borrowers with disabilities.
This brings the total to $2.3 billion in student loans cancelled.
$500 Million Cancelled for 18,000 Defrauded Borrowers
The third time student loans were cancelled was on June, and this helped student loan borrowers who have filed claims in borrowers defense. I’ve made an article about this a couple of months back, but here’s what it is.
The U.S. Department of Education approved 18,000 borrowers defense claims from those who have attended ITT Technical Institute (ITT), which has ceased its operations in 2016. That for-profit college was riddled with a lot of lawsuits, so it wasn’t a surprise anymore that they would get shut down.
While student loan cancellation has already happened in March, what’s significant about this cancellation through borrowers defense, is the approval of claims under new categories — misleading students about employment prospects and the ability to transfer credits from one school to another.
The Education Department found that ITT was in violation of those, and has approved the claims of more than 18,000 student loan borrowers defrauded by ITT.
This brings the total to $2.8 billion in student loans cancelled.
$55.6 Million Cancelled for 1,800 Defrauded Borrowers
The fourth time student student loans were cancelled was on July, and this helped additional student loan borrowers who have filed claims in borrowers defense.
The U.S. Department of Education announced on July 9 the approval of over 1,818 borrower defense claims from three schools: Westwood College, Marinello Schools of Beauty and the Court Reporting Institute. These three schools are now included in the list of approved borrower defense claims alongside Corinthian Colleges, ITT Technical Institute, and American Career Institute.
Westwood College
The Department found that Westwood College had the same violations as ITT Technical Institute, where they misled students about their ability to transfer credits, and made false claims that their criminal justice program would lead to careers as police officers. 1,600 claims were approved, representing $53 million in student loan relief.
Marinello Schools of Beauty
For Marinello Schools of Beauty, the Department found that they made “widespread, substantial misrepresentations about the instruction that would be offered at its campuses across the country.” Former students consistently claimed that the school “failed to train them about key elements of a cosmetology program, such as how to cut hair.”
There are even instances in which the school would leave students for weeks, or even months, without an instructor. Because of that, students found it hard to complete required licensing tests and receive any return on their educational investment. 200 claims were approved, representing around $2.2 million in relief.
Court Reporting Institute
Lastly, “the Department found that from 1998 through its 2006 closure, the Court Reporting Institute (CRI) made widespread, substantial misrepresentations about the time it would take to complete its court reporting program. The majority of CRI students were never able to complete the court reporting program and, therefore, could not become court reporters.”
Data and evidence also showed that only two to six percent graduated, and those who have graduated took a longer time to complete the program than what CRI claimed. 18 claims were approved, representing around $340,000 in relief.
This brings the total to around $2.86 billion in student loans cancelled.
$5.8 Billion Cancelled for 323,000 Borrowers with Disabilities
The fifth and most recent time student loans were cancelled was on August, and this helped borrowers with total and permanent disabilities.
The U.S. Department of Education announced on August 19 that over 323,000 student loan borrowers with total and permanent disabilities will receive more than $5.8 billion in relief.
These discharges were thanks to a new regulation also announced on the same day.
“The change will apply to borrowers who are identified through an existing data match with the Social Security Administration (SSA). It will begin with the September quarterly match with SSA. The Department is also announcing two other policy items related to TPD today. First, the Department will indefinitely extend the policy announced in March to stop asking these borrowers to provide information on their earnings —a process that results in the reinstatement of loans if and when borrowers do not respond—beyond the end of the national emergency. Second, the Department will then pursue the elimination of the three-year monitoring period required under current regulations during the negotiated rulemaking that will begin in October.”
The two policies are helping student loan borrowers get easier access to student loan cancellation. Those with total and permanent disabilities do not need to provide income information anymore, and the three-year monitoring period will also be removed.
But something to keep in mind though is this. “All discharges will be free from federal income taxation but there may be some state income tax consequences. Borrowers will be and are encouraged to consult their state’s tax office to understand whether this discharge will be considered income under their state’s tax code.”
While this relief is tax free on the federal level, it may be taxed on the state level. To some, this maybe a concern since many of those on TPD have a harder time looking for way to have stable income. This is why the Department is urging possible recipients to consult their tax office right away.
This brings the total to around $8.7 billion in student loans cancelled.
Conclusion
That is the current tally for the amount of student loans cancelled by the Biden administration. $8.7 billion in total. Around $1.6 billion student loans were cancelled through the borrowers defense program, and $7.1 billion for those who have total and permanent disabilities.
I don’t know what group will be targeted next since there hasn’t been any hints regarding that. I think these two groups are the first ones to be taken care of because there’s a system in placed already. And the Department is using that as a template for whichever group they’re targeting next, and they can do it better.
In regards to mass cancellation, if you look at where this trend is going, there’s a higher chance that it won’t happen at all. Those who have been defrauded by schools and those with total and permanent disabilities seem to be the logical recipients for cancellation because they became disadvantaged by their situation.
If you feel like you are part of those two groups, I highly recommend that you take action immediately. If you feel like you’ve been defrauded by your school, look into borrower defense, so you could get your student loans discharged. If you have a total or permanent disability, you may be eligible as well to have your student loans cancelled through TPD discharge.
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Hmm is anyone else experiencing problems with the pictures on this blog loading? I’m trying to find out if its a problem on my end or if it’s the blog. Any responses would be greatly appreciated.
Must be some issues with your cache or something. It works on all other devices.
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