In the first major policy announcement since his confirmation, Education Secretary Miguel Cardona stated that the federal government will cancel any outstanding debt owed for federal loans taken out by students who were defrauded by their universities, the Washington Post reported.
Cardona’s predecessor, Betsy DeVos, refused to forgive the questionable debt incurred when colleges, typically for-profit businesses, illegally or fraudulently encouraged students to take out more loans to pay for education. DeVos insisted that students be liable for some, if not all, of the debt incurred.
“Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct,” Cardona said in a statement. “A close review of these claims and the associated evidence showed these borrowers have been harmed and we will grant them a fresh start from their debt.”
Known as a “borrower’s defense to repayment,” the statute cited by Cardona would allow 72,000 to have their loans forgiven based on claims filed with the US Department of Education by the students who claimed their colleges committed fraud. The policy would provide reimbursement for students who made payments on student loans for colleges under question and wipe poor credit data off the individuals’ credit reports. It would also allow students who were previously in default to apply for new student loans.
The debt forgiveness will apply only to students who have had their claims approved. There are approximately 200,000 outstanding claims of fraud currently at the Department of Education, with 72,000 of those approved.