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Biden administration forgives $1 billion in student loans for borrowers cheated by for-profit schools

More student debt will be forgiven thanks to a policy change by the Department of Education.

JACKSONVILLE, Fla. — A policy change by the Biden Administration will allow students who were cheated by for-profit colleges' promise of employment to get full relief for their college loans.

The previous administration offered only limited relief to students of those schools, including the now-defunct Corinthian Colleges and ITT Technical Institute.

A news release from the Department of Education says this impacts federal borrowers who will have a streamlined path to receiving full loan discharges.

“Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct,” said Secretary of Education Miguel Cardona. 

The $1 billion in student loan debt is being forgiven, which is a small slice of the estimated $1.7 trillion that Americans owe. However, an attorney says this might open the door for other loans to be forgiven in the future.

"I expect this summer, we're going to see the logistics of how that $10,000 [proposed student loan] forgiveness is going to happen," student loan attorney Joshua Cohen said.

Cohen has practiced student loan law since 2008. He compares picking a college to buying a car.

If you buy a vehicle that turns out to be a lemon, it leaves the owner, or in this case a student, in a bind.

Cohen explained that is what students at for-profit colleges experienced.

“Many times you'll hear stories that they weren't even taught by degreed teachers, the teachers themselves barely had an associate [degree], or they didn't work in that field,” Cohen said.

Cohen said one red flag of for-profit colleges is accreditation and if they only provide private loans instead of federal loans.

Under the borrower defense relief process, people who filed a claim of misconduct by their school will now get all of their debt forgiven.

It is a change from former education secretary Betsy DeVos' plan, which only gave partial loan relief and made it difficult to qualify for loan forgiveness.

"Their theory was, well, you went to school, you got something out of it," Cohen said.

Cohen said the wheels are moving on the road to other student loans being forgiven.

“I think public service loan forgiveness is going to be more attainable. It's going to be simplified," Cohen explained. "I think even payment plans are going to be more simplified. I think they're looking at making this easier."

The Department of Education says an estimated 72,000 people will be impacted.

You can file an application or check the status of a pending one on the Federal Student Aid website.