Colleges Overwhelmed by Fraud Allegations as Biden Administration Expands Student Loan Forgiveness

Colleges nationwide are facing an onslaught of complaints regarding financial misrepresentation as the Biden administration pushes for expanded regulations on federal student loan forgiveness. The Education Department recently announced that it will levy a record $37.7 million fine against the country’s largest Christian university, Grand Canyon University, and encourage over 7,500 former students to file federal borrower defense to repayment (BDR) claims to cancel their loan debts. The department alleges that the for-profit university falsely advertised the cost and coursework required for certain doctoral degrees.

Under a BDR claim, borrowers can request the discharge of their federal student loans if they can prove that the college deceived them or engaged in other misconduct in violation of state law. The Education Department has been sending thousands of BDR notices to colleges and universities in an effort to clear a backlog of claims filed from 2016 through 2022. This comes as the Trump administration ignored complaints about the inability to repay loans. As part of a class-action settlement, the department has been ordered to process $6 billion in claims by July 2025.

However, colleges are grappling with the complex and overwhelming process of responding to these claims. The influx of complaints, some of which are baseless, has created confusion among college officials. Critics argue that the Biden administration is using the BDR process as a political move to forgive loans and secure votes. Despite the challenges, the Education Department maintains that colleges will have the opportunity to defend themselves and that the mere transmission of a claim does not indicate its merits or the likelihood of approval or denial.

Efforts to cancel federal student loan debts have significantly intensified under the Biden administration, which has already forgiven over $117 billion in student loan debts. However, this is just a small fraction of the $1.77 trillion in federal student loan debt owed by Americans. The sum of canceled debts could continue to grow as the Education Department increases its BDR actions at nonprofit schools.

As of January 31, there were 464,724 pending BDR applications out of a total of 779,785. This increase in claims can be attributed to rising college debt loads, prompting former students to claim that colleges defrauded them. Despite the surge in claims, the Education Department has yet to release general guidance to schools about the situation, leaving many institutions uncertain about whether or how to respond.

Overall, the expansion of student loan forgiveness regulations has put significant strain on colleges and universities as they face an influx of fraud allegations. The process remains complex and unclear, leaving both colleges and former students in a state of uncertainty.

**Focus Keyword:** student loan forgiveness