Democrats are urging President Joe Biden to take three “concrete steps” to forgive student loan borrowers before his term ends.
In a letter to Secretary of Education Miguel Cardona, roughly 80 lawmakers asked the Department of Education (DOE) to act swiftly regarding thousands of student loan borrowers.
The Democrats, including Senators Bernie Sanders and Kirsten Gillibrand, were particularly concerned about student borrowers still paying off debts from predatory for-profit colleges.
“Too many student borrowers have been preyed on by predatory schools, most of which are for-profit colleges. These for-profit colleges have a long history of disproportionately enrolling veterans, low-income students, students of color, homeless students, and first-generation college students and falsely promising high-quality jobs after graduation,” the letter sent on Tuesday read.
“Unfortunately, too many of these borrowers were saddled with debilitating debt, often without a degree to show for it. Debt has forced many of these borrowers to put their economic lives on hold, forgoing buying homes and starting families.”
To help these borrowers, lawmakers urged the DOE to discharge student loans for the hundreds of thousands of students, which the department had already promised to the borrower for defense debt relief.
Since 2022, the Education Department has announced group discharges for more than 1.2 million victims who attended predatory schools.
That included big for-profit school names like the University of Phoenix, ITT Technical Institute, Kaplan Career Institute and DeVry University.
However, according to recent court filings, hundreds of thousands of those borrowers still haven’t had their debt cleared. As of October 31, more than 25 percent of Corinthian Colleges’ borrowers still hadn’t seen their loans discharged, and many others haven’t received the refunds they were promised.
“The call to action some Senate Democrats are making pertains to a few key issues with student loan debt that legislators had been trying to push forgiveness for and now, with a new administration about to move in, feel are in peril of never happening unless a decision is made now,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.
“Regardless of your feelings on broader student loan forgiveness, this step is the right one for Washington to take. The organizations and lenders under scrutiny here have a documented history of issues with borrowers, and at this point, the easiest way to resolve these to the benefit of the former students is to forgive the debt and move on.”
The Democrats also asked Biden to issue student loan discharges for students who had attended roughly 50 other fraudulent schools, including organizations like The Career Institute, American National University and Premier Education Group.
“Substantial evidence of misconduct already exists for each of these schools,” the letter said. “Defrauded students should not be left holding the bag for institutions that no longer exist.”
Congressmembers also asked Cardona to have the Education Department process all remaining applications for borrower defense discharges. Currently, an estimated 400,000 borrowers still have pending applications for the borrower defense discharge.
More than 137,000 people have signed a MoveOn petition pleading for Biden to issue an executive order to relieve student debt.
Currently, 42.8 million Americans face student loan debt, and the collective balance remains above $1.6 trillion.
As President-elect Donald Trump nears the start of his second term, he has pledged to dismantle the Department of Education. This could also affect the Pell Grant and the Free Application for Federal Student Aid (FAFSA), which allow millions to qualify for financial aid.
Trump also previously ran a for-profit school, Trump University, which students alleged misled them with false advertising. While Trump University was open from 2005 to 2010, a federal court approved a $25 million settlement 2018 for former students.
“They are pushing for these actions because they fear inaction, similar to what they believe occurred during a previous administration, could delay or deny relief,” Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek.
“The controversy surrounding Trump University, which has faced allegations of fraud and misconduct, has heightened the urgency of these demands.”
So far, during his time in office, Biden has forgiven more than $28 billion in student debt for around 1.6 million borrowers who attended predatory schools.
“If these measures are implemented, they would provide much-needed relief to millions of borrowers who were defrauded by predatory institutions that not only harmed individuals but also misused government funds,” Thompson said. “However, if action is not taken under the current administration, it is unlikely to succeed under a future one, as a new administration may prioritize limiting government spending.”
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