student debt

White House Cancels $1 Billion in Student Debt

In a move that will particularly benefit minorities and people of color, recently approved Education Secretary Miguel Cardona has announced reform that would grant nearly $1 billion in total student loan forgiveness for approximately 72,000 Americans in the coming weeks.

According to Adam S. Minsky of Forbes, the newly announced student debt relief “will be provided under the Borrower Defense to Repayment program — a student loan forgiveness program formally established in 2016 by the Obama administration to cancel federal student debt for students who were misled, defrauded or otherwise harmed by predatory colleges and universities.”

Currently, the program is available only to students who attended for-profit institutions.

Former Education Secretary Betsy DeVos, a Trump appointee, had fought against the program, attempting to limit loan forgiveness and making it more difficult for those impacted to make their case successfully. She also enacted a controversial policy for partial student loan forgiveness; even if a student could prove they had been defrauded by a school, they would still obtain little or no actual student loan forgiveness. 

Minsky said that Cardona had announced that those DeVos-enacted restrictions would be ending immediately.

“Borrowers will now be eligible to receive complete student loan forgiveness, along with refunds for payments already made,” he reported. “Approximately 72,000 borrowers will be collectively granted around $1 billion in total student loan forgiveness in the coming weeks.

“On his first day in office, President Biden signed an executive order extending the moratorium on most federal student loan payments and interest to September 30, 2021,” Minsky reported. “Subsequently, Biden directed his Justice Department to review the legality of canceling student debt through executive action — something that he has expressed discomfort with but has not expressly taken off the table. And [in March 2021], Biden signed into law his sweeping new stimulus package, the ‘American Rescue Plan,’ which will exempt student loan cancellation and forgiveness from taxation under federal law through the end of 2025.”

In a statement, Kyle Southern, the Policy and Advocacy Director for Higher Education and Workforce for Young Invincibles said, “Today’s decision will bring long-overdue relief to tens of thousands of borrowers. It should also be a first step in the larger effort toward overhauling the federal government’s approach to borrower defense. … It is a promising sign that stronger protections for borrowers — and stronger accountability for colleges that would defraud them — are on the way.”


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