The Biden administration is wiping out another tens of millions of dollars in student loan debt, affecting borrowers who were deceived by schools that are now out of business.
With this new debt forgiveness, the Department of Education has now canceled at least $3 billion in student loans since the beginning of the year. Borrowers have been given more room in their budgets to save, invest or get a grip on their other debts.
Millions of Americans continue to wait for word on whether President Joe Biden will provide widespread student loan forgiveness. In the meantime, thousands more have been granted immediate relief.
Latest forgiveness covers students from 3 schools
The fresh debt forgiveness is going to students who attended Westwood College, Marinello Schools of Beauty and the Court Reporting Institute, the Education Department announced on Friday. All three schools, which are now closed, made “widespread, substantial misrepresentations” to students, the department says.
Eligible borrowers will receive 100% loan discharges, totaling about $55.6 million.
“Today’s announcement continues the U.S. Department of Education’s commitment to standing up for students whose colleges took advantage of them,” Education Secretary Miguel Cardona says in a statement.
The news comes less than a month after the administration canceled around $500 million in loans taken out by former students of the now-defunct ITT Technical Institute. Officials said the for-profit chain had “repeatedly lied” to the borrowers about their abilities to find jobs and transfer their credits.
Earlier actions forgave over $2.8 billion in debt
This latest round of forgiveness stems from a law that allows borrowers with federal student loans to ask that their debts be erased if their schools did anything deceptive or illegal — or abruptly went out of business.
For one of these “borrower defense” claims to be approved, you must be able to demonstrate that your college violated state statutes with your loan or with the education services that were provided.
This new relief is in addition to $1.5 billion in student debt the Biden White House canceled under the same federal law earlier this year, including in the ITT case.
A separate, unrelated move forgave another $1.3 billion.
Broad student loan forgiveness remains a question
This year’s debt cancellations are — to be completely honest — just small change compared to the sweeping student loan forgiveness that’s being discussed in Washington and is advocated by a number of influential lawmakers.
Democrats in Congress have been on a mission to convince President Biden to zero out up to $50,000 in federal student loan debt for every American saddled with unpaid college loans. They say the president should use his executive power to torpedo that debt.
He has said he’s willing to cancel $10,000 in student debt, but he has resisted calls for the bigger amount. Still, Biden has asked administration officials to look into the idea, and he told Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren last month that they’re welcome to keep pushing him on the issue.
Those fighting for more generous relief say it would give Americans a more meaningful break from crushing student debt that’s kept them from buying homes and cars, getting married and investing for the futures.
How to deal with your student debt right now
If you’re not eligible for the government’s latest forgiveness plan and you need relief from overwhelming student loan debt, there are a few things you can do right now to make your life a little easier.
First, consider refinancing your student loans. Interest rates on student loan refinances from private lenders have hit record lows, so replacing your debt with a new private student loan could cut your monthly payments substantially.
If federal loan forgiveness ever happens, it would not extend to private refi loans.
If you’re a homeowner, you might want to refinance your mortgage. With 30-year rates averaging less than 3%, some 14.1 million mortgage holders could save an average of $287 a month by refinancing, according to mortgage technology and data provider Black Knight.
The best rates go to borrowers with the highest credit scores. If you haven’t seen your score in a while, it’s easy now to take a look at your credit score for free.
After you’ve slashed your debt charges, you might generate a little more income with some low-stakes investing in the stock market. One popular app helps you build a diversified portfolio by investing just “spare change” from your everyday purchases.