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Rep. Courtney Welcomes Biden Administration’s New Loan Forgiveness Policy for Defrauded Students

August 24, 2021
Press Release

WASHINGTON, DC—Today, Congressman Joe Courtney (CT-02), a senior Member of the House Education and Labor Committee, welcomed the Biden Administration’s announcement that it will formally continue to presumptively grant full student loan relief to borrowers the Department of Education (ED) determines were defrauded by their colleges. The new policy marks a departure from that of former Education Secretary Betsy DeVos and the Trump Administration, which adopted a formula under which defrauded students could only receive partial relief. Instead, the Education Department under Secretary Miguel Cardona will assume that defrauded borrowers are entitled to 100 percent relief, unless evidence is presented to the contrary.

“The Biden administration made another positive incremental step today to address the ever-looming student loan crisis,” said Rep. Courtney. “The U.S. Department of Education announced today that it will eliminate the unworkable rules put into place during the Betsy DeVos era that effectively denied relief for defrauded student borrowers. Biden’s order creates a presumption of one hundred percent discharge for student victims of ‘rip-off’ schools that ensnared them into taking out loans for programs that were closed without warning, or blatantly misrepresented the value of the curriculum offered. In Connecticut, for-profit schools like ITT Tech and Ridley-Lowell in New London closed suddenly in 2016 and 2018, respectively, leaving students without degrees or certifications, and with thousands of dollars still in student loan debt. On top of the Biden Administration’s recent extension of the ‘pause’ on student loan payments to January 2022, this is another step to provide relief for student loan borrowers.”

So far under President Biden, ED has cancelled over $1.5 billion in student debt for about 92,000 borrowers defrauded by for-profit schools.

  • On March 18th, Secretary Cardona reversed the Trump-era debt-cancellation methodology, known as the "borrower defense to repayment", a policy that gave only partial relief to defrauded students. Today’s announcement affirms they will not be creating a new methodology, and instead will presume defrauded borrowers' approved claims are entitled to full relief, unless evidence suggests otherwise.
  • Along with getting rid of the DeVos methodology, Secretary Cardona also granted nearly 72,000 borrowers $1 billion in student-debt relief under the Borrower Defense to Repayment program. The relief applied to approximately 72,000 student loan borrowers who attended for-profit schools who were already approved by the Department of Education for Borrower Defense relief. It did not apply to the tens of thousands of additional student loan borrowers who are awaiting a decision, or whose claims were previously denied by the Department.
  • On June 16th, Secretary Cardona cancelled student debt for 18,000 additional borrowers defrauded by ITT Technical Institutes, totaling to about $500 million in debt relief.
  • On July 9th, Secretary Cardona cancelled student debt for 1,800 borrowers who attended the for-profit schools Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute.

Courtney is a senior member of the House Education and Labor Committee, and has worked for years to help students seeking justice and repayment from unscrupulous for-profit colleges. On April 11th, Courtney and Connecticut Attorney General William Tong welcomed the announcement of new policy from ED that will restore state government’s ability protect student loan borrowers by conducting oversight of loan servicers on behalf of borrowers within their jurisdictions—a crucial element of maintaining good stewardship over federal student aid programs. Click here to read more.

In addition to helping defrauded students, Courtney has long been focused on throughout his career on lowering the cost of higher education and easing student loan debt. This year, he has introduced two bills that seek to address the root causes of the problem. In May, Courtney introduce the Zero-Percent Student Loan Refinancing Act (H.R. 3024), a new bill that would allow Americans with federal student loans to refinance their debt to an interest rate of 0%. Recently, the Federal Reserve Board and its Chairman Jerome Powell declared that the benchmark interest rate will remain at essentially zero for the balance of 2021, 2022, and well into 2023. Rep. Courtney’s bill would give public borrowers the same opportunity to take advantage of this low-rate environment that so many borrowers in other sectors of the economy will utilize.

Courtney also introduced the bipartisan Recognizing Military Service in PSLF Act (H.R. 3486), a new bill that would finally enable American service members to count the full length of their service towards the Public Student Loan Forgiveness (PSLF) program. Existing rules prevent many active duty servicemembers who have deployed far away from their families from applying their full period of service towards PSLF—meaning that they are made to complete a longer period of service before qualifying for student loan forgiveness. Courtney’s bill would ensure that American servicemembers have their full service periods appropriately counted towards their loan forgiveness.

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