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Biden administration is whittling away at backlog of student debt relief claims

The latest cancellations amount to a total of $55.6 million in relief

Education Secretary Miguel Cardona speaks during a press briefing at the White House on March 17. (Andrew Harnik/AP)
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Working through a backlog of student debt relief claims, the Education Department said Friday it will cancel the loans of more than 1,800 people defrauded by defunct for-profit chains Westwood College, Marinello Schools of Beauty and the Court Reporting Institute.

The Biden administration inherited scores of petitions from former students of for-profit schools requesting the department cancel their debt under a statute known as “borrower defense to repayment.” Applications piled up at the department amid a series of college closures and the Trump administration’s efforts to delay and limit loan cancellation.

Biden administration delivers debt relief to some former ITT Tech students

Advocacy groups have complained that the new administration is not working fast enough to resolve claims that in some cases have languished at the department since President Barack Obama was in office. Education Secretary Miguel Cardona says the federal agency is committed to helping students whose colleges took advantage of them.

“The Department will continue doing its part to review and approve borrower defense claims quickly and fairly so that borrowers receive the relief that they need and deserve,” Cardona said Friday. “We also hope these approvals serve as a warning to any institution engaging in similar conduct that this type of misrepresentation is unacceptable.”

The latest approvals amount to a total of $55.6 million in relief. That follows the discharge of federal loans held by former ITT Technical Institute and Corinthian Colleges students in recent months, bringing the Biden administration’s total loan cancellation through the borrower defense statute to more than $1.5 billion for nearly 92,000 people.

Cardona scraps DeVos policy, will fully cancel debt of many students defrauded by colleges

All three of the schools at the center of the latest round of approvals engaged in widespread misrepresentations of their programs, according to the department.

The federal agency found evidence of Marinello leaving students without instructors for months at a time, resulting in many struggling to pass state licensing exams from 2009 until it closed in 2016.

Marinello ultimately lost access to federal student aid in 2016 after the department said the beauty school chain illegally requested federal financial aid for students with invalid high school diplomas, charged students for excessive overtime and withheld a portion of students’ federal aid. Before it shuttered, the school had about 56 campuses stretching from Connecticut to California.

Beauty school chain shuts down days after tangling with the government

In the case of Westwood, the department found that from 2002 through its closure in 2015 the chain misled students about their ability to transfer credits. It also discovered the school lied to students by saying that its criminal justice program in Illinois would lead to careers as police officers with the Chicago Police Department, which would not accept Westwood credits. Students said they often had to accept minimum wage jobs or work that required no degree.

Former students at the Court Reporting Institute, commonly known as CRI, were never able to complete their program, with fewer than 6 percent of attendees graduating, according to the department. The agency says it found the for-profit chain lying about the time it would take to complete its courses from 1998 through its 2006 closure.

Many of the findings underpinning the approved claims were provided by state attorneys general in Washington, Colorado and Illinois. While the Trump administration eschewed partnering with state law enforcement to hold schools accountable, the Biden administration says it will rely on those authorities in upholding consumer protection.

The Biden administration is under pressure to make further headway in resolving borrower defense claims and ensuring the process is easier to navigate. The Education Department is weighing future rulemaking on the statute that dates to the 1990s.

The Obama administration updated the policy to shift more of the cost of forgiveness onto schools and streamline the process for students. Under former education secretary Betsy DeVos, the department scrapped the update and rewrote the regulation setting a higher bar for forgiveness.