Marinello Beauty Schools Loan Forgiveness: Student Debt Canceled


Amid continued pressure from progressive lawmakers for widespread student debt forgiveness, the Biden administration on Thursday announced a new round of targeted relief — this time for former beauty school students who, according to authorities, failed to train students in its “how to cut hair” cosmetology programs in some cases.

The Department of Education stripped Marinello Beauty Schools, now a closed, for-profit college, from federal funding in 2016 due to “widespread and widespread misconduct.”

The agency announced Thursday that it will forgive debt through its Borrower Defense Program for students who attended the school from 2009 until it closed in 2016. The forgiveness initiative clears debt for students who can prove that they were defrauded by their schools.

Normally in similar cases, borrowers individually apply for forgiveness, but the Department for Education said it had taken the unusual step of clearing the debt in a collective complaint, the first time since 2017 This will mean $238 million in debt relief for 28,000 people. borrowers, including some who had not yet applied for loan cancellation.

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“Marinello preyed on students who dreamed of a career in the beauty industry, misled them about the quality of their programs, and left them buried in unaffordable debt they couldn’t repay,” said said Education Secretary Miguel Cardona. “Today’s announcement will simplify access to debt relief for thousands of borrowers caught up in Marinello’s lies.”

The latest round of cancellations comes at a time when broader student debt cancellation is in the news.

As of March 2020, the federal government froze the requirement that the country’s 41 million borrowers repay their federal student loans. Interest was set at zero and collection efforts were also suspended. The moratorium was supposed to expire in May, but Biden extended it again until August 31.

Marinello’s news comes days after media reports in which lawmakers suggested the president was considering more debt cancellation. And on Thursday, Biden confirmed that, but said he would not forgive as much as some Democratic lawmakers have asked.

“I am carefully considering whether or not…there will be further debt forgiveness and I will have a response on that within the next few weeks,” he said.

Biden has been reluctant to talk about universal student loan forgiveness and instead shifted the responsibility to Congress. The president previously campaigned to forgive up to $10,000 in student debt per borrower.

At a news conference announcing the new cancellation Thursday morning, Education Department Undersecretary James Kvaal said the agency was considering widespread loan cancellations, but in the meantime it said the department is “doing everything we can where we have the power to act”. .”

“One thing we found when we got here was that even when borrowers were eligible for loan forgiveness, they often didn’t get it,” Kvaal said.

The administration has written off about $18.5 billion in student loan debt since Biden took office. And about $2.1 billion of that has benefited about 132,000 people under the Borrower Defense Program.

Under President Trump, the government had rejected tens of thousands of people seeking financial aid and claiming their colleges had misled them. The Ministry of Education was then the subject of a class action which is still ongoing.

There are about 110,000 borrower defense applications pending ministerial review, according to the most recent federal data.

The announcement also comes after a coalition of consumer advocacy groups sued the Department for Education over its handling of defense borrower cases.

The recent lawsuit, which was brought by the National Student Legal Defense Network, the Project on Predatory Student Lending at Harvard and the National Consumer Law Center, focuses on students who had attended the now closed Kaplan Career Institute in Massachusetts.

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In that case, the Massachusetts Attorney General’s Office filed a class borrower defense request in 2016 on behalf of 100 borrowers who claim the institution pressured them to enroll using “unfair sales tactics.” and harassing” and lied about students’ job prospects.

But the lawsuit says the department ignored that request and deprived borrowers of relief for years. And he said the agency could support other class claims filed by state attorneys general for students who attended institutions including Anthem University, Corinthian Colleges and Westwood College.

Aaron Ament, president of the National Student Legal Defense Network, said the department’s action on Marinello was welcome but overdue, and “should just be the tip of the iceberg.”

“The backlog of students who are owed debt relief under Borrower Defense is long and growing – it is bigger now than it was under the Trump administration. – and this decision shows that there is no reason the Department cannot adjudicate class claims at this time,” Ament said.

Kvaal said the Department of Education will continue to review other group complaints. He said the agency started with Marinello because the Department of Education had already investigated the institution.

The administration also recently announced changes to income-based repayment plans, a move that allows borrowers to tie their monthly payments to their income. And borrowers in these plans can become eligible for debt forgiveness after 20 years of payments.

Among the changes, the federal agency said it would explain how it counted past payments and would review all past payments. As a result of these and other changes, the Department for Education said 40,000 borrowers from the Civil Service Loan Forgiveness Program would have their loan balances forgiven. (Borrowers must be enrolled in an income-based repayment program to participate in the program that provides debt relief to public service workers.)

The agency further estimated that 3.6 million borrowers in these income-focused plans would receive three years of credit as a result of the changes.

Contributors: Joey Garrison, Rebecca Morin


USA Today

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