- The Education Department approved $238 million student debt relief for 28,000 borrowers on Thursday.
- The relief was for Marinello Schools of Beauty students, which was accused of "widespread" misconduct.
- While now closed, the department said Marinello misled students about the quality of their programs.
Student-loan borrowers who took on debt to go to a for-profit beauty school are getting relief.
On Thursday, President Joe Biden's Education Department announced it will be wiping out $238 million in student debt for 28,000 borrowers who went to Marinello Schools of Beauty between 2009 through its closure in 2016. This is the second round of approval of borrower defense claims — a type of loan forgiveness for students defrauded by for-profit schools — for Marinello students, with 200 of them having received $2.2 million in relief last July.
"Marinello preyed on students who dreamed of careers in the beauty industry, misled them about the quality of their programs, and left them buried in unaffordable debt they could not repay," Secretary of Education Miguel Cardona said in a statement. "Today's announcement will streamline access to debt relief for thousands of borrowers caught up in Marinello's lies."
—U.S. Department of Education (@usedgov) April 28, 2022
Prior to this announcement, the department has been approving individual borrower defense claims, and this is the first time since 2017 it is forgiving debt for a group of borrowers that didn't file individual applications but were found to have been defrauded. As the press release noted, the department had continued to examine evidence of misconduct "so widespread across all the school's campuses" between 2009 and its closure that all borrowers who took on debt to go to Marinello are entitled to full relief.
The Education Department said it will "soon" begin alerting borrowers to their relief, and changes to their accounts will be made in the coming months automatically.
In 2020, Senate Majority Whip Dick Durbin and Student Defense — a group that advocates for borrowers' rights — called on the department to use its existing authority to provide full and automatic relief to defrauded borrowers, particularly when it comes to group filings. This week, for example, Student Defense filed a lawsuit against the Education Department over unresolved claims, particularly pertaining to an application filed six years ago on behalf of a group of students who attended now-defunct for-profit school Kaplan Career Institute.
"This six-year failure is unconscionable, given the detailed evidence of misconduct" provided to the department, the suit stated. Student Defense said it is long overdue those group filings are reviewed, and the debt is relieved.
"As many advocates have said for years, Marinello students are among the groups of defrauded borrowers who have waited far too long for the relief they deserve," Student Defense President Aaron Ament told Insider. "So this move is welcome and overdue, but it should just be the tip of the iceberg. The backlog of students who are owed debt relief under borrower defense is long and growing — it's bigger now than it was under the Trump administration — and this move shows there is no reason the Department can't rule on group claims right now."
Thursday's announcement brings the total of approved borrower defense claims under Biden to about $2.1 billion for 132,000 borrowers.