The Department of Education said Thursday that it plans to repeal a Trump administration policy that limited loan relief granted to students who were victims of fraud by for-profit colleges and universities. Photo by Chris Kleponis/UPI | License Photo
March 18 (UPI) -- The Department of Education Thursday announced plans to roll back a Trump administration policy that granted only partial student loan relief to students defrauded by for-profit colleges.
A senior Education Department official told reporters on a call Thursday that the formula, introduced by former Education Secretary Betsy DeVos "was not granting an appropriate level of relief to borrowers" who had provided clear evidence they were the victims of fraud.
The department said it will instead implement a more "streamlined approach" which it estimated will eliminate about $1 billion in student loan debt from about 72,000 students, many of whom attended ITT Technical Instituties and Corinthian Colleges.
"Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution's misconduct," Education Secretary Miguel Cardona said. "We will grant them a fresh start from their debt."
The changes are centered around a provision commonly known as Borrower Defense, which allows borrowers who believe they have been defrauded by a college or university to apply to have their debts erased.
Under the Obama administration, the Education Department approved thousands of claims after Corinthian and ITT abruptly shut down.
The Trump administration stopped approving applications for relief under the program and in 2019 DeVos implemented a partial-relief formula that gauged how much relief a defrauded borrower would receive by comparing their earnings to graduates of similar school programs.
"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," Cardona said.
Marcia FudgeHousing and Urban Development Secretary.
White House Press Secretary Jen Psaki (L) looks on as Secretary of Housing and Urban Development Fudge, the first Black woman to lead the department in decades, speaks at a news conference in the James Brady Press Briefing Room of the White House. Photo by Michael Reynolds/UPI | License Photo