Approximately 15,000 students who took out federal loans to pay for their education at a list of mostly proprietary schools that have closed are eligible to have some or all of the loans discharged.
The Education Department started late last week emailing the student borrowers to inform them that the debts would be discharged over the next 30-90 days.
The student loan borrowers all qualify for automatic closed school discharge, and these borrowers must have attended a college that closed between Nov. 1, 2013 and Dec. 4, 2015. Approximately half of the borrowers, representing about $80 million of student loan debt, attended Corinthian Colleges Inc., a large for-profit institution, which closed on April 27, 2015.
According to the Education Department, to qualify for automatic closed school discharge, a borrower must meet the following criteria:
• Was enrolled when the school closed.
• Withdrew not more than 120 days before the school closed.
• if approved by the U.S. Department of Education, withdrew more than 120 days before the school closed.
• Did not enroll at another Title IV-eligible school within three years of the date the borrower’s prior school closed.
In October, a federal judge ordered the Department to implement the Borrower Defense to Repaying rule, another Obama-era student loan forgiveness rule that allows students to have their federal loans forgiven if a school employed illegal or deceptive practices to encourage attendance at the school.
Attorneys general from 19 states plus the District of Columbia sued the Education Department and Secretary Betsy DeVos for delaying the borrower protection rule that was scheduled to take effect beginning July 1. The lawsuit alleged that DeVos illegally delayed the implementation of the borrower defense to repaying rule, which was intended by the Obama administration to make it easier for defrauded student-loan borrowers to receive student loan debt forgiveness.
As of June, approximately $535 million across 48,000 claims have been granted to students for student loan debt relief, According to data from the Education Department. More than 100,000 borrowers — many of whom attended now-defunct for-profit colleges — are still waiting for their claims to be processed.
DeVos said she wants to strike a fair balance between protecting students from predatory practices and creating balanced rules to which colleges can adhere.