President Biden’s recent stimulus bill provided funding for colleges and universities to cancel student loan debt, and some student loan borrowers are beginning to see the benefits.
Delaware State University announced this week that it will be issuing over $700,000 in student loan forgiveness to at least 200 students who are facing hardships due to the Coronavirus pandemic.
“Too many graduates across the country will leave their schools burdened by debt, making it difficult for them to rent an apartment, cover moving costs, or otherwise prepare for their new careers or graduate school,” said Antonio Boyle, Vice President for Strategic Enrollment Management, in a statement. “While we know our efforts won’t help with all of their obligations, we all felt it was essential to do our part.”
The move by Delaware State University follows updated policy guidance issued by U.S. Department of Education Secretary Miguel Cardona in March after Congress passed President Biden’s stimulus bill, the American Rescue Plan. The updated guidance allows colleges and universities to use stimulus funds for a variety of student needs, including cancelling student debt in certain cases. Specifically, educational institutions can use stimulus funding for “financial aid grants to dual enrollment, continuing education, non-degree seeking, or non-credit students, as well as to a broad range of students with exceptional needs, such as certain refugees or persons granted asylum.” Colleges can also use the funds to discharge unpaid institutional debts for students.
“Many students have had their postsecondary careers turned upside down as they manage their schoolwork while also protecting themselves from this virus,” said Education Secretary Cardona in March when he announced the changes. “We hope every eligible student takes advantage of these benefits while continuing to focus on their studies.”
Institutional student loan debt — debt owed directly to a college or university, rather than the government or a private student loan lender — can be a major headache for students and borrowers. Institutional student debts are typically ineligible for federal student loan relief and forgiveness programs. And failure to repay these debts can result in serious consequences including academic transcript withholding and inability to transfer credits, complete a degree program, or pursue a secondary degree or enter a graduate program.
Meanwhile, student loan borrower advocates and their progressive allies in Congress continue to press Biden to use executive action to cancel student loan debt on a mass scale. The administration is reviewing its options, and Biden has ordered officials at the U.S. Department of Education and the Department of Justice to conduct a legal review of student loan forgiveness options.
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