WASHINGTON—The Education Department will discharge another $415 million in student debt held by borrowers who said they were defrauded by for-profit schools that misrepresented their graduates’ employment prospects or otherwise swindled them, federal officials said Wednesday.
The loans of nearly 16,000 former students are being forgiven under a legal provision known as borrower defense to repayment, which allows students to have their debts erased if they prove that their schools defrauded them.
The borrowers whose loans were addressed Wednesday said the four for-profit schools, University, Westwood College, ITT Technical Institute’s nursing school and Minnesota School of Business/Globe University, provided deceptive information about their employment prospects, Education Department officials said.The relief also covers former students of other institutions who have previously qualified for borrower defense relief, but who had not previously applied for it. That includes borrowers who attended defunct schools such as Corinthian Colleges and Marinello Schools of Beauty.
Only one of the schools, DeVry, is still in operation. The action marks the first time the Education Department has used the borrower defense program to aid the former students of an open school.In a statement, DeVry spokeswoman Donna Shaults noted that the university had changed its board and leadership structure since 2015. “Nonetheless, we do believe that the Department of Education mischaracterizes DeVry’s calculation and disclosure of graduate outcomes in certain advertising, and we do not agree with the conclusions they have reached,” she said.
“While it is critical to get students relief, we also want to deter wrongdoing and protect taxpayers,” Undersecretary of Education James Kvaal said of the importance of pursuing claims against institutions that are still operational.Education Department officials noted that borrowers who attended the schools during periods where alleged wrongdoing was identified, in the case of DeVry between 2008 and 2015, can continue to apply for relief even if they weren’t included in the initial tranche of debt forgiveness.
There are around 43 million Americans with student debt. As a candidate, President Biden endorsed canceling $10,000 in student debt per borrower through legislation and proposed forgiving tuition-related federal debt for people who earned undergraduate degrees at public colleges and universities, as well as schools that historically serve Black and minority students.With congressional action stalled, the Biden administration has pursued a more piecemeal approach through the borrower defense program, actions on behalf of borrowers with disabilities, and a revamp of the Public Service Loan Forgiveness program.
The actions have resulted in around $16 billion in loan discharges for around 680,000 borrowers since Mr. Biden took office, around $2 billion of which came through the borrower defense program. Student loan payments have been suspended by the government during the pandemic, with the latest extension due to expire on May 1.
All told, Americans owe around $1.6 trillion in federal student loans and more than $130 billion in private student loans, according to the data company MeasureOne. About 5.2 million federal borrowers are in default.
The Biden administration is also in the midst of restructuring its student loan processing system. It announced in November that it was ending its relationship with private collection agencies that had been tasked with recovering payments from federal student loan borrowers in default to improve collections and provide borrowers with more support.
You must be logged in to post a comment.