More than 1,200 University of Phoenix alums have had roughly $37 million in federal student loan debt forgiven thanks to a recent announcement from the Biden administration. The for-profit university was shut down after it was discovered that it had lied to its students about their chances of getting hired.
Borrowers who qualify for debt relief from the Department of Education will be notified sometime in early October. The government will notify loan servicers to temporarily suspend payments on behalf of concerned borrowers until the debt is officially cancelled.
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Biden stated in a statement that the forgiven borrowers “were cheated into believing” that a degree from the University of Phoenix would lead to “promising career prospects” with Fortune 500 corporations when in fact, no such opportunities existed. Like Ashford University in San Diego and CollegeAmerica in Colorado, the University of Phoenix is a for-profit institution that has been accused of student loan fraud.
The Federal Trade Commission alleges that the University of Phoenix, a for-profit institution that touts itself as a “online college for working adults,” made misleading claims that it collaborated with firms including Microsoft, Twitter, Adobe, and Yahoo to help students find employment.
Despite having his first loan forgiveness plan ruled down by the Supreme Court in June, the Biden administration has forgiven $117 billion in debt for more than 3.4 million borrowers.
CHIEF CRITIC
In a statement to Forbes, a University of Phoenix spokesperson said they “respectfully, but adamantly disagree” with the Department of Education’s allegations against them related to the FTC settlement. “While the University is not against relief for borrowers who have valid claims, we intend to vigorously challenge each frivolous allegation and suspicious claim through every available legal avenue,” the spokesperson said.
Important Context
Biden made lowering student debt a central plank of his 2020 campaign, but he hasn’t accomplished nearly as much as many had hoped. Approximately $400 billion in federal student loans (up to $20,000 for borrowers who received Pell grants and $10,000 for those who didn’t) were set to be forgiven under Vice President Joe Biden’s first broad forgiveness program, but the Supreme Court ruled the administration had exceeded its authority.
At the time the Supreme Court threw it down, the White House projected that 40 million people would have benefited from the program and 16 million people had already been granted forgiveness. People who work in public service, were allegedly scammed by their institutions, or who did not receive relief that was meant to accompany previous income-driven repayment schemes are the recipients of the $117 billion he has forgiven so far.
He was ultimately successful in developing the SAVE repayment scheme, which, unlike prior income-based repayment programs, forgives certain residual debt sooner and bases monthly payments on a borrower’s income and family size rather than the loan sum itself.
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Tangent
Former students of the University of Phoenix are relieved to hear of the cancellation of their debts just days before the long hiatus in repayment of their student loans ends. After initially being put on hold until September of 2020, payments on federal student loans were extended throughout the Covid-19 epidemic and will resume on October 1, 2020. Loan interest, which had been suspended for the duration of the pandemic, began accruing again on September 1.
How To Apply For Student Loan Forgiveness?
Applying for student loan forgiveness can provide much-needed relief from the burden of student debt. There are several forgiveness programs available, each with its own eligibility criteria and application process. Here’s a general overview of how to apply for student loan forgiveness:
- Identify Your Loan Type:
- Determine whether you have federal or private student loans. Loan forgiveness programs primarily apply to federal loans, so it’s crucial to know your loan type.
- Research Eligibility:
- Understand the eligibility requirements for the specific loan forgiveness program you intend to apply for. Some programs are based on factors like your profession, income, or repayment plan.
- Choose the Right Forgiveness Program:
- Select the forgiveness program that best aligns with your circumstances. Common federal forgiveness programs include Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness, and Income-Driven Repayment (IDR) forgiveness.
- Meet the Minimum Requirements:
- Ensure that you meet the minimum criteria for the program. For example, PSLF requires you to work in qualifying public service employment for at least 10 years while making 120 qualifying payments.
- Consolidate Your Loans (if needed):
- If you have multiple federal loans, you may need to consolidate them into a Direct Consolidation Loan. This is often a requirement for PSLF, as only Direct Loans are eligible.
- Complete the Application:
- Obtain and complete the appropriate forgiveness program application form. Each program has its own application, so make sure you choose the correct one.
- Gather Required Documentation:
- Collect any necessary supporting documents, such as employment certification forms, tax records, or income verification documents. These may be required to prove your eligibility.
- Submit Your Application:
- Submit your application and any required documentation to the designated loan servicer or agency. Make sure to follow the submission instructions carefully.
- Monitor Progress:
- Keep track of your application’s progress and maintain accurate records of your payments and qualifying employment. This documentation will be essential for the forgiveness process.
- Await a Decision:
- The processing time for forgiveness applications varies, so be patient. Once your application is reviewed, you’ll receive a decision regarding your eligibility for loan forgiveness.
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Continue Making Payments (if applicable):
- While your application is being processed
Note: Remember that student loan forgiveness is not guaranteed, and eligibility requirements vary depending on the program. It’s essential to research your options, gather necessary documentation, and follow the appropriate application process. Additionally, staying informed about changes in student loan forgiveness policies and regulations is crucial as programs may evolve over time.
