Feds forgive millions of student loans for defrauded beauty school students

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On April 28, the US Department of Education announced that it would provide loan forgiveness to students at Marinello Beauty Schools who have been burned by the institution. Students who received loans between 2009 and February 2016, when the school finally closed, will have their debt forgiven. The move affects 28,000 borrowers and totals nearly $238 million.

Canceling student loans has been a top priority for the Biden administration, which has canceled more than $18 billion in student loan debt since taking office. Since March 2020, the Biden administration has frozen federal student loan payments, a move it just announced will continue until August 2022. This problem has a significant impact on black university graduates, who, according to statistics, are burdened with an average of $25,000 more in student loan debt than white college graduates.

The department says the Marinello Schools of Beauty student debt will be forgiven based on the borrower defense program, which allows students to not pay the federal loans they received, if they can prove that they were defrauded by their school. In Marinello’s case, a federal investigation found that schools failed to teach their cosmetology students important parts of the curriculum, such as how to cut hair. And when a cosmetology student doesn’t know the right way to cut their hair, it’s extremely difficult for them to pass the state licensing tests they need to work and pay off their loans. And if that wasn’t enough, class action lawsuits have also been filed in Nevada and California accusing schools of using students as a source of unpaid salon work.

Education Secretary Miguel Cardona said in a statement:

“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 couldn’t repay. Today’s announcement will simplify access to debt relief for thousands of borrowers caught up in Marinello’s lies.

Aaron Ament, president of the National Student Legal Defense Network, hopes the Marinello ruling is a sign of more needed loan forgiveness to come. “The backlog of students who are owed debt relief as part of borrower defense is long and growing – it’s bigger now than it was under the Trump administration – and This decision demonstrates that there is no reason the department cannot adjudicate class claims at this time.” he said.

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