As millennials increasingly face a mountain of student loan debt, an obscure federal law may save them over $164 million dollars.
The Wall Street Journal reported Wednesday that more than 7,500 borrowers have applied to have their student loan debt expunged due to a federal law that has only been used in three instances before 2015.
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The federal law in question states that the federal government will forgive the debt of anyone who can prove that their college used illegal tactics to entice them to enroll, including lying about graduate employment and earning levels after they complete school.
Students who graduated from Corinthian College have already benefited from this law, 1,300 former students saw their $28 million in student loans forgiven in August of 2015.
This law was part of a 1994 forgiveness program and the Department of Education claims that it is overly vague and could cost taxpayers billions of dollars. Students do not only receive debt forgiveness, but also a reimbursement on the loans they have already paid.
“We just don’t know (the potential scope)”, said Undersecretary for the DOE, Ted Mitchell to the Wall Street Journal. “This is new territory for us.”
So far all the applicants who have received forgiveness attended for-profit schools.
That could all change as million look to explore this uncharted legal territory that could help them start building a life for the future rather paying back the past.
