A set of new federal rules were recently put in place to assist people who took out student loans under misleading circumstances. Qualifying Tennessee borrowers who are able to prove that their school used fraudulent means to induce them to take out loans may be eligible to have their federal student loans discharged, according to the Washington Post.
Several for-profit schools have been found guilty of misrepresenting facts about the programs they offered, job placement statistics of their graduates and the transferability of credits. Misrepresentation in this case also includes facts that these schools may have omitted in order to get people to enroll. While the new rules only apply to federal loans, some people are advocating for the scope to be increased to include all borrowers who may have been defrauded. Students who were able to transfer credits or who did find employment after graduating may be eligible for partial forgiveness on their loans.
While this is seemingly good news for hundreds of thousands of student loan borrowers throughout the country, it appears that many people are not taking advantage of the loan forgiveness program. In fact, in mid-June only 15,000 of the 280,000 students who took out loans for schools operated by the Corinthian College chain had applied to have their loans forgiven, according to BuzzFeed News.
The reason behind this lack of applications may be due to the prevalence of student debt scams. Many borrowers are either aware of, or have already been burnt by, people claiming to help them obtain relief from their student debts. That is why some experts are hoping the government will work together with the firms that service these debts to let students know about their eligibility.