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Defrauded college students can have their federal loans fully forgiven under new policy

A new Biden administration policy will allow full federal student loan relief to borrowers defrauded by their colleges.

According to a news release from U.S. Rep. Joe Courtney’s office, the policy is a departure from practice under former President Donald Trump's administration, “which adopted a formula under which defrauded students could only receive partial relief. Instead, the Education Department under Secretary Miguel Cardona will assume that defrauded borrowers are entitled to 100 percent relief, unless evidence is presented to the contrary,” the news release reads.

Southeastern Connecticut residents may be affected by the shift. The now-defunct, for-profit school Ridley-Lowell, located in New London, closed abruptly in 2018. It offered certifications in dental and medical fields, beauty and electrical work at campuses in New London and Danbury. A representative for the school at the time said it closed due to "severe financial and operational challenges."

The closing of the Ridley-Lowell school hurt students financially, Courtney said in the news release.

President Joe “Biden’s order creates a presumption of one hundred percent discharge for student victims of ‘rip-off’ schools that ensnared them into taking out loans for programs that were closed without warning, or blatantly misrepresented the value of the curriculum offered,” Courtney said in the news release. “In Connecticut, for-profit schools like ITT Tech and Ridley-Lowell in New London closed suddenly in 2016 and 2018, respectively, leaving students without degrees or certifications, and with thousands of dollars still in student loan debt. On top of the Biden Administration’s recent extension of the ‘pause’ on student loan payments to January 2022, this is another step to provide relief for student loan borrowers.”

Thus far, during Biden’s tenure, more than $1.5 billion in student debt for more than 90,000 borrowers defrauded by for-profit schools has been canceled.

In 2018, Courtney announced the U.S. Department of Education would help students who attended Ridley-Lowell. The department’s website provided information on such topics as obtaining official transcripts, options for discharging student loans and contacting student loan servicers.

Courtney, a member of the House Education and the Workforce Committee, wrote to then Secretary of Education Betsy DeVos to request the department take action in the wake of the Ridley-Lowell closing.

The school, which had a location at the corner of Bank and Howard streets in New London, also operated in Danbury and in New York and Rhode Island. About 150 students were enrolled at the Connecticut locations.

“Many of Ridley-Lowell’s students used federal student loans and grants to pay tuition and it is imperative that we get them the resources they need to make good choices on what to do next,” Courtney said in a statement at the time. “I am glad that the (Education) Department is moving quickly to exercise its statutory authority to protect both taxpayers and the students who put their faith in this school’s promise of a certificate that would provide gainful employment.”

s.spinella@theday.com

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