After losing in court, Dept of Education will cancel $150 million in student loan debt

I am very happy to report that the Department of Education is finally implementing its Borrower Defense rule, an Obama-era regulation intended to protect students from predatory colleges and universities. The rule requires the department to provide automatic discharges of federal loans to certain borrowers who cannot complete their programs of study because the borrowers’ schools close prematurely.

The Department’s first efforts will benefit approximately 15,000 borrowers. Roughly half of these borrowers received loans for attendance at Corinthian Colleges, Inc., a notorious for-profit college that closed in 2015 under the weight of its own wrongdoing. The Department expects to automatically discharge $150 million, approximately $80 million to former Corinthian students, in this first wave of implementation.

Implementation is long overdue, and thousands of students are still waiting for relief.

The papers from our litigation challenging the Department's unlawful delay (with co-counsel at Harvard Law School's Project on Predatory Student Lending Project) are here.