President Joe Biden hasn’t yet followed through on his intention to cancel up to $10,000 in student loan debt per borrower, but Thursday marked two more developments in his ongoing forgiveness strategy.
Biden wipes out another $238 million in student loans—but something much bigger might be comingBY Sydney LakeApril 28, 2022, 5:54 PM
First, the Education Department announced that 28,000 borrowers who attended Marinello Schools of Beauty will receive a collective $238 million in student loan debt cancellation. Then Biden also signaled something much bigger: A decision on whether to cancel student loan debt en masse will be coming in the “next couple of weeks,” he said during a press conference.
“I’m considering dealing with some debt reduction,” Biden said. “I am not considering $50,000 in debt reduction [per borrower], but I’m in the process of taking a hard look at whether or not there will be additional forgiveness. I’ll have an answer on that in the next couple of weeks.”
A reporter covering the conference asked “how high” Biden would go in terms of debt forgiveness per borrower, but the president didn’t give an answer. Other top Democrats including Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren have been pressing Biden to forgive $50,000 in debt per borrower.
Since taking office, Biden has forgiven loans of borrowers in four distinct groups: defrauded borrowers, public service workers, borrowers with a total and permanent disability, and certain borrowers with an income-driven repayment plan. Total forgiveness during the Biden administration currently stands at more than $20 billion. This latest round of forgiveness falls into the defrauded borrowers category, which includes debt cancellations for students who attended programs that had defrauded or mistreated them.
“Marinello preyed on students who dreamed of careers in the beauty industry, misled them about the quality of their programs, and left them buried in unaffordable debt they could not repay,” U.S. Secretary of Education Miguel Cardona said in a statement. “Today’s announcement will streamline access to debt relief for thousands of borrowers caught up in Marinello’s lies.”
Who qualifies for this round of forgiveness
In March 2021, Cardona and the Biden administration started offering forgiveness for borrowers with “defense to repayment” claims, meaning the government had determined the borrower attended a school that took part in deceptive or illegal practices.
Marinello Schools of Beauty students started receiving forgiveness for these borrower defense claims in July 2021 when the Education Department announced it would approve borrower defense claims for 1,800 borrowers who attended the beauty school as well as the Court Reporting Institute and Westwood College.
According to the Education Department’s Thursday announcement, about 300 borrower defense claims from Marinello had been approved under the findings in July that the school had made “widespread, substantial misrepresentations about the instruction that would be offered at its campuses across the country.” This latest round of forgiveness will help an additional 24,000 borrowers who attended Marinello.
The round of forgiveness announced Thursday will go to borrowers who enrolled in the schools from 2009 through Marinello’s closure in February 2016. At the time, the school operated 56 campuses, which “abruptly shut down” after the Education Department found the school had been misallocating federal student aid funding.
The Department had also found that the Marinello schools had failed to train students in key elements of cosmetology—including how to cut hair—and that the schools had left students for weeks or months without instructors, according to the department’s release.
“As a result, students would have found it extremely difficult to pass necessary state licensing tests and receive the promised return on their educational investment,” according to the Education Department. “Not only did Marinello fail to teach its students, class-action lawsuits filed in Nevada and California alleged that the school used salons as profit centers and exploited students as a source of unpaid labor.”
In all, debt cancellation on borrower defense claims made during the Biden administration stands at $2.1 billion among 132,000 borrowers, according to the Education Department. This has included forgiveness for borrowers who attended other schools including ITT Tech, Corinthian Colleges, DeVry University, Westwood College, and Minnesota School of Business/Globe University.