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☆ 317,000 student-loan borrowers are getting $6.1 billion in debt canceled after being misled about career prospects and how much money they could make after graduation
▼ + stars: | 2024-05-01 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

The Education Department announced $6.1 billion in student-debt relief or 317,000 borrowers. The relief applies to borrowers who attended any Art Institute campus from January 1, 2004, to October 16, 2017. Investigations found that the Art Institutes misled students about career prospects and salaries. The Art Institutes were a for-profit system that prompted investigations from the attorneys general of Iowa, Massachusetts, and Pennsylvania. More broadly, the Education Department is working to implement its broader student-loan forgiveness plan after the Supreme Court struck down its first attempt.

Persons: —, Joe Biden's, Richard Cordray, Biden Organizations: Education Department, Art Institute, Investigations, Art, Service, Joe Biden's Education Department, Art Institutes, Aid, Corinthian College, Public Locations: Iowa , Massachusetts, Pennsylvania

☆ Federal Student Aid head Richard Cordray, tasked with FAFSA rollout, to step down
▼ + stars: | 2024-04-26 | by ( Katie Lobosco | ) edition.cnn.com time to read: +7 min

Washington CNN —The head of the Federal Student Aid office, which has faced criticism for the botched rollout of this year’s college financial aid form, will be stepping down. The announcement of Cordray’s departure comes as his office has been under fire for problems with a new version of the Free Application for Federal Student Aid, or FAFSA, released late last year. “If there was a financial aid director, or even a college president, that delayed financial aid on their campus for up to six months, the professional price that would be paid for that would be pretty steep,” Justin Draeger, president of the National Association of Student Financial Aid Administrators, told lawmakers. Cordray’s tenureAs the head of FSA, Cordray oversaw not only the FAFSA but also the entire $1.6 trillion federal student loan system. It also sued Navient, one of the biggest federal student loan servicers, for allegedly processing payments incorrectly.

Persons: Richard Cordray, Cordray, Justin Draeger, Virginia Foxx, Miguel Cardona, Cordray’s, Rich Cordray’s, ” Cardona, “, Rich, Obama, ” Cordray, Pell, Biden, Trump, Massachusetts Sen, Elizabeth Warren —, Navient, “ I’m, ” Warren Organizations: Washington CNN, Federal, Aid, CNN, Department of Education, Federal Student Aid, Education, Workforce, National Association of Student Financial, Republican Rep, Consumer Financial Protection Bureau, Democratic, National College, of Education, Public, Consumer Financial, Massachusetts, Corinthian Colleges Locations: North Carolina, Ohio

☆ Leader of Federal Student Aid Office Steps Down After College Admissions Crisis
▼ + stars: | 2024-04-26 | by ( Zach Montague | ) www.nytimes.com time to read: +1 min

The nation’s top student aid official is stepping down, the Education Department said Friday, after the disastrous rollout of a new financial aid form that upended the college admissions process for millions of students this year. Richard Cordray, who took over as the leader of the Federal Student Aid office in 2021, will hand over his duties in June, Education Secretary Miguel A. Cardona said in a statement. Mr. Cordray’s departure coincides with a fraught admissions season. College administrators, students and members of Congress across the political spectrum have rebuked the Education Department for mismanaging a redesign of the Free Application for Federal Student Aid form, throwing the usual college admissions process into disarray. In his role, Mr. Cordray also oversaw a variety of other programs, including many parts of the Biden administration’s sweeping vision of student debt relief for millions of borrowers through loan forgiveness and income-driven repayment plans.

Persons: Richard Cordray, Miguel A, Cardona, Cordray Organizations: Education Department, Federal, Aid, College, mismanaging, Biden

☆ Inside the Blunders That Plunged the College Admission Season Into Disarray
▼ + stars: | 2024-03-13 | by ( Erica L. Green | Zach Montague | ) www.nytimes.com time to read: +1 min

There were just days left to process a batch of federal financial aid applications when Education Department officials made a fateful discovery: 70,000 emails from students all over the country, containing reams of essential data. They were sitting in an inbox, untouched. The students’ futures depended on it. “It needs to get untangled,” Mr. Cordray told his staff members on Thursday, according to recordings of two back-to-back meetings that The New York Times obtained. Three years ago, Congress ordered the Education Department to revamp the new form to make it easier and more accessible.

Persons: Richard Cordray, Mr, Cordray, ”, “ Organizations: Education Department, New York Times, Federal Student Aid

☆ Why college applicants will have to wait months longer to find out how much financial aid they're getting this year
▼ + stars: | 2024-02-01 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +6 min

The latest delay means financial aid awards might not come until April. AdvertisementThe sole application for receiving college financial aid has had a rocky rollout this year — and it means reward letters will be delayed by months. AdvertisementThe latest delay in receiving financial aid awards can be attributed to the department's efforts to update FAFSA qualifications to expand families' financial aid eligibility. However, that'll take time — and could leave some families in a time crunch when it comes to evaluating their financial aid packages. "Updating our calculations will help students qualify for as much financial aid as possible."

Persons: —, That's, they'll, that'll, Education James Kvaal, Justin Draeger, Draeger, Virginia Foxx, Burgess Owens, Secretary Miguel Cardona, Sen, Bill Cassidy, Biden, Cassidy, Foxx, Richard Cordray Organizations: Education Department, Service, Federal Student Aid, Education, U.S . Department of Education, National Association of Student Financial, Republican, Secretary, Department, Office, Aid

☆ Student-loan borrowers could take legal action against their servicers or the Biden administration if repayment mistakes aren't fully fixed, a new federal memo says
▼ + stars: | 2023-11-02 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +5 min

The Education Department released a memo detailing mistakes it found student-loan servicers are making with repayment. It pushed for the mistakes to be remedied for borrowers to avoid legal action. AdvertisementAdvertisementPresident Joe Biden's Education Department is concerned student-loan borrowers could turn to legal action if issues with their accounts aren't fully resolved. The Education Department said it will continue enforcing oversight over servicers to ensure borrowers are not further harmed by mistakes to no fault of their own. "We are committed to making things right for borrowers and holding our contractors accountable for errors when they do occur."

Persons: MOHELA, —, Joe Biden's, Education James Kvaal, servicers, I've, it's, Richard Cordray Organizations: Education Department, Service, Joe Biden's Education Department, Wednesday, Federal Student Aid, Education, MOHELA, Department, The Education Department Locations: forbearance

☆ A for-profit school that 'deceived' student-loan borrowers and pushed them to take on 'unexpectedly high levels' of debt got hit with a $37 million fine, Biden's Education Department says
▼ + stars: | 2023-10-31 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

The Education Department fined for-profit Grand Canyon University $37 million over accusations of misleading behavior. It said Grand Canyon mispresented the costs of its doctoral programs, leading to high student debt. AdvertisementAdvertisementA major for-profit school just got hit with a fine over accusations of misleading thousands of its students. A senior department official told reporters on a Tuesday press call that this is the largest penalty the Education Department has ever enforced on a school. "Rather than the Department protecting students, we are being forced to protect our students from this targeted and unwarranted government overreach."

Persons: —, Joe Biden's, GCU, Richard Cordray, GCU's, Aaron Ament, they'll Organizations: Education Department, Canyon University, Service, Joe Biden's Education Department, Grand Canyon University, Federal, Aid, Department, Federal Student Aid, The Education Department, University of Phoenix, Student Defense, of Education

☆ A major student-loan company failed to send on-time billing statements to 2.5 million borrowers. Biden's Education Department is punishing it.
▼ + stars: | 2023-10-30 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

The Education Department announced it's withholding $7.2 million in pay from student-loan company MOHELA. It's a result of MOHELA failing to deliver on-time billing statements to 2.5 million borrowers. AdvertisementAdvertisementPresident Joe Biden's Education Department just enacted its first punishment on a student-loan company for its repayment mistakes. MOHELA and the Education Department have previously expressed concerns with limited resources due to Congress failing to increase funding for Federal Student Aid in the previous fiscal year. The Education Department did not immediately respond to Insider's request for comment on whether there might be any adverse effects of withholding MOHELA's pay.

Persons: —, Joe Biden's, MOHELA, Miguel Cardona, Richard Cordray, Cordray Organizations: Education Department, Service, Joe Biden's Education Department, Public, Department, Federal Student Aid, Democratic Locations: It's, forebearance

☆ Biden administration forgives $37 million in student debt for defrauded borrowers
▼ + stars: | 2023-09-20 | by ( Annie Nova | ) www.cnbc.com time to read: +2 min

The Biden administration announced Wednesday it would cancel nearly $37 million in student debt for more than 1,200 students who attended the University of Phoenix. The borrower defense program allows borrowers who can prove they've been misled or defrauded by their schools to get their federal student loans voided. "The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll," said Richard Cordray, the federal student aid chief operating officer. The FTC had obtained internal emails, as well as advertisement materials and recorded phone calls with prospective Phoenix students. "Phoenix management was aware that the corporate relationships the school claimed to have did not exist," the Education Department said.

Persons: Biden, they've, University of Phoenix brazenly, Richard Cordray, Goldman Sachs, ‘ Organizations: University of Phoenix Chicago, University of Phoenix, U.S . Department of Education, University, Phoenix's, Fortune, Education Department, Finance, Federal Reserve, Federal Trade Commission, FTC, Phoenix Locations: Schaumburg , Illinois

☆ 1,200 student-loan borrowers are getting $37 million in debt wiped out after being 'brazenly deceived' by the University of Phoenix, Biden's Education Department says
▼ + stars: | 2023-09-20 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

1,200 student-loan borrowers who attended University of Phoenix are getting $37 million in debt relief. On Wednesday, President Joe Biden's Education Department and Federal Trade Commission announced that 1,200 borrowers who attended University of Phoenix will be getting $37 million in debt relief. Phoenix students who were enrolled between September 21, 2012, and December 31, 2014, and submitted claims, are included in this batch. The Education Department said it will begin notifying borrowers in early October that their borrower defense claims have been approved. Over the past months, the Education Department has taken a series of actions to assist defrauded borrowers.

Persons: Joe Biden's, University of Phoenix brazenly, Richard Cordray, Ashford Organizations: University of Phoenix, Education Department, Service, Joe Biden's Education Department, Federal Trade Commission, Phoenix, Aid, FTC, University, Ashford University, San Locations: Phoenix, Wall, Silicon, San Diego

☆ Student-loan borrowers should be able to achieve 'financial freedom' through bankruptcy, Elizabeth Warren says — especially with 'the looming threat of restarting' repayment
▼ + stars: | 2023-07-27 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +5 min

Sen. Elizabeth Warren sent a letter to the Justice Department for an update on bankruptcy reforms for student-loan borrowers. In November, the DOJ updated guidance to make the bankruptcy process easier. In November, President Joe Biden's Education and Justice Departments released new guidance on the process for borrowers to get rid of their debt through bankruptcy. As Insider previously reported, Biden himself played a part in making the bankruptcy process more difficult for student-loan borrowers. The Justice Department has not yet commented on updates to the bankruptcy process.

Persons: Sen, Elizabeth Warren, Massachusetts Sen, Joe Biden's, it's, Warren, Merrick Garland, Garland, Biden, Richard Cordray, we're Organizations: Justice Department, DOJ, Service, Massachusetts, Joe Biden's Education, Justice, ED, Consumer, Federal, Department, Education Department, Consumer Financial Protection Bureau Locations: Wall, Silicon

☆ 7,400 student-loan borrowers hurt by a school's 'widespread misconduct' are getting $130 million in debt wiped out, Biden's Education Department says
▼ + stars: | 2023-07-25 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +5 min

The Education Department announced it will be wiping out $130 million in student debt for 7,400 borrowers. On Tuesday, the Education Department announced it will deliver $130 million in debt cancellation to 7,400 students who were enrolled at Colorado-based locations of CollegeAmerica between January 1, 2006 and July 1, 2020. The department said it will begin notifying borrowers eligible for relief in August, after which those borrowers will see their remaining balances wiped out. In 2022, CEHE sued the Education Department, accusing it of forcing the company to close so students would qualify for debt relief. And in total, we have approved $116 billion in debt relief for over 3.4 million Americans," he continued.

Persons: Joe Biden's, Richard Cordray, CEHE, Philip Weiser, –, Biden, we've Organizations: Education Department, Service, Joe Biden's Education Department, Center, Excellence, Higher, Aid, Colorado Attorney, Corinthian Colleges, CollegeAmerica Locations: Colorado, CollegeAmerica, Wall, Silicon, CollegeAmerica Colorado

☆ Student-loan borrowers just got an added layer of protection from schools that take advantage of them 'to make a quick buck'
▼ + stars: | 2023-03-15 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +3 min

It will be using secret shoppers to identify misleading behavior that push students to take on debt. Findings from secret shopping will be used as evidence to support any investigation the department will conduct into a school that could be engaging in predatory behavior. "Secret shopping is another tool in FSA's toolbox as we expand our oversight work to hold predatory schools accountable," FSA Director Richard Cordray said in a statement. "Our focus—as always—is to ensure that students, borrowers, families, and taxpayers are not being preyed upon to make a quick buck." "Consequences for schools that violate these prohibitions could include the termination or limitation of a school's participation in the Department's federal student aid programs," Kristen Donoughue, FSA's chief enforcement officer, wrote in the blog.

☆ Canceling student debt for millions of borrowers 'cheated by for-profit colleges' isn't enough, Biden's Education Department says — it's time for the top executives to pay up
▼ + stars: | 2023-03-06 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

The Education Department released new guidance to hold executives of for-profit colleges financially liable for unpaid costs to the government. When a school shuts down or is accused of fraud, taxpayers or students often pay the costs. Last week, the Education Department released new guidance on implementing the Education Secretary's authority to hold executives of private colleges financially liable for the cost of unpaid debts defrauded students took on. "The Biden-Harris Administration is canceling the loans of more than a million borrowers cheated by for-profit colleges. But too often, the owners and executives of these colleges escape liability," Under Secretary of Education James Kvaal said in a statement.

☆ Elizabeth Warren urges the Supreme Court to strike down Trump-appointed judges' decision to imperil funding for a student-loan industry and consumer-rights watchdog
▼ + stars: | 2023-02-27 | by ( Jason Lalljee | Ayelet Sheffey | ) www.businessinsider.com time to read: +5 min

The Supreme Court will take on a lower court's decision that the Consumer Financial Protection Bureau's federal funding is unconstitutional. Senator Elizabeth Warren advocated for the Supreme Court to strike down that decision. "If the Supreme Court follows more than a century of law and historical precedent, it will strike down the Fifth Circuit's decision before it throws our financial markets and economy into chaos." McHenry, who now runs the House Financial Services Committee, has hinted at seeking stronger oversight for CFPB for months now. And that's on top of a longer context of Republicans challenging the CFPB's funding and decision making.

☆ It just got easier for defrauded student-loan borrowers to apply for debt cancellation
▼ + stars: | 2023-02-06 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

The Education Department launched a new website to help defrauded student-loan borrowers apply for debt relief. While this website may ease the application process, many defrauded borrowers continue to wait for relief. Approval of those claims means the department will discharge any debt the student took out to attend the school in question. It includes information on reasons borrowers apply for borrower defense, what type of misconduct qualifies for debt relief, specific details on information borrowers should include in their claims, and what happens after a borrower applies. A section of Federal Student Aid's new borrower defense website detailing information to include in a claim.

☆ 3 signs Biden's Education Department has not 'efficiently or effectively' taken steps to overhaul the student-loan repayment system, according to the inspector general
▼ + stars: | 2023-01-19 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

The Education Department plans to revamp the student-loan servicing system. But a report from the Inspector General found it has not been preparing to do so effectively. Last week, the Education Department's Office of Inspector General released a report analyzing Federal Student Aid's (FSA) efforts to transition the current repayment system to a new one, known as Next Generation (Next Gen) Loan Servicing. Additionally, it recommends that FSA develop a policy that requires a budget request be completed and approved prior to moving forward with any changes to the student-loan servicing system. The exact timeline for when borrowers will experience the revamped student-loan servicing system is unclear at this point, especially as the administration is working to implement other significant changes.

☆ The government's new spending bill has protections for student-loan borrowers dealing with bad behavior by companies that manage their debt
▼ + stars: | 2022-12-20 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

The new government spending bill did not increase funding for the Federal Student Aid office. But it did include language on holding student-loan companies accountable for misleading borrowers. On Monday, the House appropriations committee released the text of its $1.7 trillion government spending bill for the upcoming fiscal year. But given the lack of increased funding in the spending bill, its likely the implementation of that system will be delayed. Borrowers have reported a number of issues with student-loan companies over the past year.

☆ Some students are graduating college with 'unmanageable' debt — but it's not their fault, a government watchdog finds
▼ + stars: | 2022-12-06 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +5 min

Specifically, 91% of colleges are understating the net price, which can mislead students into taking on more debt. Current federal law does not require colleges to follow standards when presenting financial aid packages. Not counting student loans in the total cost could present a misleading picture of how expensive a degree would be, pushing students further into debt. "Colleges that estimate the net price by subtracting student loans from the cost of attendance do not present the full net price because students generally must repay their student loans eventually," the report said. "Additionally, subtracting student loans in the net price estimate presents loans as the default method for paying for college, potentially encouraging students to borrow more than they otherwise would."

☆ Student-loan borrowers who are behind on payments can avoid facing collections for one year after the payment pause ends. Here's how Biden's Education Department wants to make sure companies holding t
▼ + stars: | 2022-12-05 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +3 min

introduced its "Fresh Start" plan, which would help defaulted student-loan borrowers. Last week, the department released updated guidance to the agencies that hold those borrowers' debt. Borrowers will have one year after payments resume to make use of the program. According to Cordray's guidance, the agencies that hold defaulted student-loan borrowers' debt will be required to suspend collection attempts for borrowers in the Fresh Start program for a year following the end of the payment pause. Along with guidance to the guaranty agencies, borrowers in default will also need to take action to return to good standing.

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