%1

The Education Department is discharging $72 billion in student loans for over 2,300 former students who attended Ashford University after the department found the online for-profit school made “substantial misrepresentations” that harmed borrowers, YahooFinance.com reported. The action applies to borrowers who enrolled in Ashford from March 1, 2009, through April 30, 2020, and filed for a borrower defense loan discharge, a legal ground borrowers can take against a school that engaged in misconduct related to the loan or the educational services it provided. These borrowers will receive emails from the Education Department in September and no further action is needed. Borrowers who attended Ashford but did not file a borrower's defense discharge will need to complete an application on the Federal Student Aid website. This discharge comes after litigation on behalf of the California Department of Justice against Ashford and its parent company, Zovio Inc. resulted in a judgment against both entities in March 2022.

For most people with federal student loans, the Supreme Court dashed their dreams of debt relief. Still, some borrowers are beginning to have their balances wiped away, Bloomberg News reported. The Department of Education recently began forgiving $39 billion in student debt for more than 800,000 borrowers that enrolled in income-driven repayment plans and had made monthly payments for at least 20 years. The Biden administration launched a one-time effort in April last year to correct administrative errors that had kept borrowers on the hook for repayments when their balances ought to have dropped to zero. Their clean slates are landing just as payments are set to resume on federal loans for the first time in more than three years.

A federal appeals court put on hold a Biden administration program to make it easier for defrauded borrowers to have their student debt canceled, WSJ Pro Bankruptcy reported. The New Orleans-based U.S. Court of Appeals for the Fifth Circuit on Monday issued an injunction freezing an initiative, known as the Borrower Defense to Repayment, while it hears a lawsuit by several Texas-based for-profit schools challenging the government’s ability to offer the program. Oral arguments are expected in November. The program allows students who have been misled by schools about job prospects or are victims of other types of fraudulent behavior and aggressive recruiting to have their federal debt canceled in full by the Education Department. Students applying for debt relief may have to wait longer for approval while the injunction is in place, if claims are processed at all. A spokesman for the Education Department didn’t immediately comment on the injunction. In court filings, the department said it was relying on debt-cancellation powers that the department has had for decades and that have been updated by several administrations. Put in place during the Obama administration, the program has been the target of litigation by students and for-profit schools. It was weakened under the Trump administration, whose Education Secretary, Betsy DeVos, was sued for failing to act on hundreds of thousands of outstanding student claims. The Biden administration revived the program with changes that streamline the process for borrowers to make claims and that allow them to apply for relief as part of a legal settlement. The Biden administration has canceled $14.7 billion in debt for 1.1 million borrowers, a figure that includes a major settlement of claims from students who sued the Trump administration. Last month, after new rules for the program went into effect, the administration approved $130 million in claims from 7,400 student borrowers who were enrolled at a Colorado chain of for-profit colleges.

Private student loan borrowers who filed for bankruptcy are finally getting some relief from student loan provider, Navient Corp., to the tune of $198 million, YahooFinance.com reported. Navient settled a lawsuit with borrowers who alleged the company illegally collected on private student loans by falsely telling borrowers that their loans were not discharged in bankruptcy. The settlement includes $182 million in debt relief and $16 million cash compensation for impacted borrowers along with help to improve their credit scores as a result of the illegal collections. The settlement affects borrowers who had private student loans with Navient that were discharged in bankruptcy. Eligible borrowers identified by Navient will receive notices and debt relief will be automatic.

The Education Department and the Colorado attorney general on Tuesday announced $130 million in automatic debt discharge for 7,400 Colorado student loan borrowers who attended CollegeAmerica, YahooFinance.com reported. Based on evidence gathered by the Colorado attorney general’s office, the Education Department found that CollegeAmerica’s parent company — the Center for Excellence in Higher Education (CEHE) — made misrepresentations about graduates’ salaries and employment rates, its programs, and the terms of private loans it offered borrowers. Eligible borrowers were enrolled at Colorado-based locations of CollegeAmerica from Jan. 1, 2006, to July 1, 2020. It doesn’t apply to borrowers who attended CollegeAmerica campuses outside of Colorado, senior department officials said in a press call. Discharge also only applies to federal student loans, not private loans or commercial FFEL loans.