Biden forgives $238 million in cosmetology school student loans 2022-04-28 05:00:00

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The Education Department said Thursday it will cancel the loans of 28,000 student borrowers who attended the now-defunct beauty school chain, the latest step taken by the Biden administration to address a politically charged issue of student debt forgiveness.

Borrowers who attended Marinello Beauty Schools between 2009 and their closing in 2016 are eligible for the $238 million grant. The federal government previously determined that Marinello “engaged in widespread and widespread misconduct that negatively affected all borrowers” registered during that period—among other things, that it “failed to train students in key elements of the beauty program, such as how to cut hair.”

Some of Marinello’s loans have already been forgiven, but Thursday’s action amounts to a collective discharge of anyone who went to school during that time, even those who did not apply for relief. It is the first such group loan exemption since the Obama administration.

Navient’s latest $1.7 billion settlement will wipe out student debt for 66,000 borrowers. Josh Mitchell of the WSJ broke down the settlement and explained which borrowers would get debt forgiveness. Photo: Storyblocks

Marinello’s loans were forgiven under the borrower’s defense of the repayment program, a An essential part of the management approach debt relief. The program disburses student loans who were Misled by for-profit schools about their career prospects or make other misrepresentations. The Education Department is in the middle of updating borrower defense rules, with the goal of making it easier for borrowers to apply for loan forgiveness under the program.

In particular, the administration wants to make it easier for groups of borrowers to cooperate to claim that a school defrauded them, something that was not allowed under the Trump administration’s issuance of the regulation. Trump officials said the Obama-era rules were too loose and vague and threatened to increase taxpayer costs to cover canceled debts. For-profit schools oppose the group application process, citing potential reputation risks.

About 40 million Americans take on student debt. As a candidate, President Biden

Cancellation supported $10,000 in student debt to each borrower through legislation and proposed forgiveness for federal tuition-related debt for people who have earned college degrees at public colleges and universities, as well as schools that have historically served black and minority students.

President Biden, here at a White House event honoring teachers on Wednesday, indicated that he is seriously considering action to cancel student loan debt on a large scale.


picture:

Samuel Corum/Bloomberg News

With Congressional action stalled, the Biden administration has taken a more piecemeal approach through its borrower advocacy program, taking action on behalf of borrowers with disabilities and renewing the Public Service Loan Forgiveness Program. The Ministry of Education announced last week Changes to the popular income-based payment program For low-income borrowers, after concluding that the current program has not fulfilled its promise to forego loans after borrowers have made 20 or 25 years of payments. The program has resulted in debt relief for just 157 of more than eight million registered borrowers, according to a federal watchdog.

Payments and interest on federal student loans are on hold until August 31, after six extensions of pandemic-era policy by the Trump and Biden administrations.

The Biden administration’s actions have resulted in about $18.5 billion in loans being forgiven for more than 750,000 borrowers since Biden took office, including more than $2 billion through the Borrower Defense Program.

In this week’s meeting with Democratic members of Congress, Mr. Biden indicated that he is seriously thinking work for Large-scale student loan debt forgivenessAccording to congressional aides and others familiar with the discussions.

Senate Majority Leader Chuck Schumer (D.T.) said Mr. Schumer has long urged Mr. Biden to pursue a broad-based $50,000 relief for the borrower.

As talk rages on the issue, Republicans have become more forceful in their denunciation of widespread tolerance. Senator Mitt Romney (R., Utah) Suggest that debt forgiveness is a ‘bribe’ to Democratic voters because of Mr. Biden’s low approval numbers.

Other Bribery Suggestions: Forgive Auto Loans? Forgiveness of credit card debt? Forgive the mortgages? And the imposition of a wealth tax on the very wealthy to pay for it all. What could possibly go wrong? Mr. Romney said on Twitter.

write to Gabriel T. Robin V gabriel.rubin@wsj.com

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