Thousands of Americans will have their student loan debt canceled, the U.S. Department of Education announced late Thursday.
The move follows a ruling made by a federal judge in the fall, essentially requiring the Education Department to implement an Obama-era borrower-defense rule that Education Secretary Betsy DeVos had tried to overturn.
The rule provides protections for those with student loans whose schools close or defraud them. The judge ruled that DeVos’ efforts to overturn the rule were illegal, thereby ensuring that it would remain in place.
As a result of the ruling, 15,000 borrowers whose colleges closed between November 2013 and December 2018 will have their debt canceled, totaling $150 million. The loan discharges will be automatic, but may take up to 90 days to complete.
Approximately half of those affected attended a chain of for-profit colleges owned by Corinthian Colleges, which went bankrupt in 2015. Others who attended a school that has since closed or feel they have been defrauded will be eligible to apply to have their loans canceled.
Sen. Patty Murray, ranking member of the Health, Labor, Education and Pensions Committee, told NBC News, “It’s disappointing that it took a court order to get Secretary DeVos to begin providing debt relief to students left in the lurch by predatory for-profit colleges, but I am pleased the Department has finally started implementing this rule and that some of the borrowers who attended schools like Corinthian Colleges and ITT Tech are finally getting their loans cancelled. This is a good first step, but it’s not good enough.”
According to her office, more than 100,000 students have outstanding claims.
