InfoBytes Blog
Department of Education discharges roughly $500 million in student loan debt
On June 16, the Department of Education announced the approval of 18,000 borrower defense to repayment claims for individuals who attended a now-defunct for-profit educational institution, providing borrowers with 100 percent loan discharges and providing approximately $500 million in relief. The educational institution has been subject to several investigations and settlements related to its private student loan origination practices, including allegations brought by the CFPB claiming the educational institution forced borrowers into “high-interest, high-fee” private student loans knowing that borrowers could not afford them. (See InfoBytes coverage on matters related to the educational institution here and here.) According to the Department’s announcement, the approvals cover two categories of borrower claims related to employment prospects and the ability to transfer credits, and mark “the first approval of a new category of borrower defense claims by the Department since January 2017.” Among other things, the Department found that borrowers’ “job prospects were not improved by attending” the educational institution and that credits from the educational institution rarely transferred.