$238M in student loans being discharged for 28K borrowers due to school ‘misconduct’
Student loan relief is on the way for thousands of borrowers defrauded by a group of beauty schools. (Getty)
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(NEXSTAR) – Roughly 28,000 borrowers will have their loans discharged after a set of beauty schools were found to have “preyed” on them and failed to teach them key skills for the trade, the Department of Education announced Thursday. The borrowers will no longer be responsible for paying $238 million in student loans as a whole, amounting to about $8,500 in relief per borrower.
According to the Education Department, borrowers who attended Marinello Schools of Beauty between 2009 and its closure in February 2016 are included in the latest action. During those seven years, the school is accused of harming these borrowers with “pervasive and widespread misconduct.”
“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,” said U.S. Secretary of Education Miguel Cardona said in a press release. “Today’s announcement will streamline access to debt relief for thousands of borrowers caught up in Marinello’s lies.”
Borrowers who have been misled by their school or attended a school that engaged in misconduct can be eligible for “borrower defense to loan repayment,” the Federal Student Aid office explains. If approved, a borrower may have some or all of their federal student loan debt discharged, meaning they no longer need to make payments on it. This covers direct loans from the government only.
As of Thursday, the Education Department says it has approved about 300 defense claims related to Marinello after finding last summer that the schools had made “misrepresentations about the instruction that would be offered at its campuses across the country.” Students of Marinello weren’t properly trained on “key elements of a cosmetology program,” the department found, including how to cut hair. At times, Marinello also left students without instructors for weeks or months.
Because of Marinello’s misconduct, former students have struggled to pass state licensing tests. Class-action lawsuits have already been filed against Marinello in Nevada and California, accusing the school of using salons as profit centers and students as unpaid laborers.
The group discharge of loans will include those that haven’t yet applied for a borrower defense discharge, according to the Department of Education. This is the first group discharged for defrauded borrowers under the Biden administration and the first since 2017.
Students who attended Marinello between 2009 and 2016 will be notified of their approvals for discharge soon, the Education Department said Thursday. Borrowers won’t need to take any additional actions to receive their discharges.
Since Biden took office, a total of $2.1 billion in student loan relief has been approved for 132,000 defrauded borrowers.
Among those are roughly 1,800 former DeVry University students who received relief after the Education Department found the institution “made widespread substantial misrepresentations about its job placement rates.” Another 25,900 borrowers are receiving borrower defense discharges due to findings related to five other institutions, including Marinello.