WASHINGTON (AP) — The Biden administration is moving forward with an overhaul of several student debt forgiveness programs, aimed at making it easier for borrowers to get relief if they are duped by their colleges or students. they work a decade as civil servants .

The Department for Education on Monday finalized a set of rules it proposed earlier this year. The new rules take effect in July and are separate from President Joe Biden’s sweeping student debt forgiveness plan, which has been held up in court in a legal challenge by Republican-run states.

Education Secretary Miguel Cardona called it a “monumental step” that will make it faster and easier to get debt relief. “The Biden administration is fixing a broken system and putting borrowers first,” Cardona told reporters on Monday.

Chief among the changes is an overhaul of a program known as borrower defense, which provides debt forgiveness to students whose colleges falsely advertise or commit fraud. The program aims to help victims of predatory for-profit colleges, but it has been bogged down by complex rules and political battles, leading to a growing backlog of applications.

The new policy clarifies that the Department of Education can review complaints from individual borrowers or that it can grant pardons to huge swaths of students from the same college, if it is found to have committed fraud. The department may pursue these “group release” claims on its own or in response to requests from states or nonprofit legal groups.

It’s a reversal of Trump-era policies that eliminated group dumps and made it harder for individuals to qualify for aid. The new rule cements the department’s ability to wipe out the debt of thousands of borrowers in a single action, as the Biden administration has already done for those who attended ITT Tech, Corinthian Colleges and other college chains for purpose. lucrative.

In a major change, the federal government will also be able to require colleges to cover fees when their students are granted loan forgiveness due to fraud. Those costs have generally been passed on to taxpayers, prompting complaints from conservative critics who say the program writes off debt too freely at the expense of the public.

“We put students ahead of special interests,” Cardona said, adding that his agency would go after “shady schools” that leave students in deep debt and earning “useless” college degrees.

The rules were embraced by student advocates but lambasted by an industry group representing for-profit colleges. The group said the rules would strip schools of due process protections, and it questioned how well the department reviewed the more than 5,000 public comments responding to its original proposal.

“The department cut corners in a rush to impose a punitive borrower defense rule with serious legal and regulatory loopholes that could undermine America’s education system,” said former Democratic congressman and CEO Jason Altmire. General of Career Education Colleges and Universities. .

The overhaul also makes big changes to the Public Service Loan Forgiveness Program, which was created by Congress to incentivize government and nonprofit workers but has failed to deliver on its promise due to notoriously complex rules.

Under existing rules, teachers, nurses and other public servants can get the rest of their federal student debt forgiven after making 120 monthly payments. All payments must be made in full and within 15 days of their due date, otherwise they do not count towards the 120 monthly installments.

The new rule erases the 15-day rule, allowing payments to count even if they are made late or in installments. It also allows borrowers to make up to a year’s worth of payments in one lump sum, rather than making monthly payments.

Borrowers in certain situations will also be able to progress towards debt cancellation even if they do not make payments. Those whose student loans are suspended for cancer treatment, military service, or the Peace Corps, for example, will be treated as if they were still making monthly payments during that time.

Greater flexibility will also be added to a separate program offering debt cancellation for people with disabilities.

This program cancels federal student debt for people who are permanently disabled and unable to generate significant income. But many got this relief, their debt was later reinstated because they failed to submit documents during a three-year follow-up period.

The new rule will eliminate the watch period and make more types of disabilities eligible for cancellation.

Loosening rules on existing debt forgiveness programs has been a priority for the Biden administration, which has already awarded $38 billion in debt forgiveness to defrauded students, public students and others. That doesn’t include Biden’s extensive cancellation plan, which is estimated to be around $400 billion.

A federal appeals court temporarily blocked Biden’s plan, creating uncertainty for millions of borrowers who were told they would get up to $20,000 forgiven. The Department of Education said it was still processing applications even though it was barred from clearing the debt. Cardona said Monday his agency is moving “full steam” with the plan.


The Associated Press education team receives support from the Carnegie Corporation of New York. The AP is solely responsible for all content.