Friday’s announcement by the U.S. Education Department was that it would forgive student loans of more than 1,800 borrowers who attended three for-profit colleges. These colleges made false recruiting claims, leaving many students without jobs.
Former students of Westwood College and Marinello Schools of Beauty, as well as the Court Reporting Institute, are being forgiven by the Biden administration for more than $55 millions in unpaid debt. After being accused of fraud and deceit in their advertising, all three chains were closed for many years.
This is yet another step in the Education Department’s efforts to clear the backlog of claims in its borrower defense program. It offers loan forgiveness for students who have been defrauded at their schools. The Trump administration stopped the program and rewrote its rules. This created a backlog of over 100,000 pending claims.
Miguel Cardona, Education Secretary, stated that the department would continue to do its part to approve borrower defense claims quickly so that borrowers get the relief they need.
He said that the new round should serve as “a warning to institutions engaging in similar conduct that this kind of misrepresentation was unacceptable.”
The majority of newly approved claims are for Westwood College students who were not currently enrolled. This college had several campuses before it closed in 2015. According to the Education Department, although Westwood College claimed that students could transfer their courses to other colleges, this was often not true. Many students were forced to start their college careers over again after they transferred.
Also, the company made false claims regarding a criminal justice program for Illinois. It claimed that graduates could be hired as Chicago police officers. Many police agencies refused to accept Westwood credits, so many Westwood graduates had to take minimum wage jobs in other areas.
The Marinello Schools of Beauty received about 200 loan discharges. They closed their doors in 2016 when the federal government cut its funding. According to the department, the college had a history in failing to provide the education promised. In some cases, students were left without instructors for several months. Some cosmetology students didn’t learn key skills such as how to cut hair and had trouble passing state licensure tests.
18 claims were approved by the department from the Court Reporting Institute. This institute had offices in Washington, California, and Idaho, before closing down in 2006. The college was found guilty of lying about the time it took to train to be a court reporter. The department found that only 6% of students graduated, while those who did graduate took longer than the college claimed.
The Biden administration erased student loans from more than 18,000 borrowers at the ITT Technical Institute. This is another for-profit college that has been closed down. It also cleared $1B in debt for former Corinthian Colleges students. The administration has granted nearly 92,000 borrowers claims worth $1.5 billion.
As it attempts to reverse Trump-era policies, the Biden administration is looking at a number of programs that could be reformed. Betsy DeVos, former Education Secretary, issued new rules to reduce loan forgiveness. She said it had become too easy to get.
DeVos also created a new formula , which offered only partial relief for loans even if claims were made. In March, Cardona removed the formula and stated that all borrowers who were granted relief would have their loans completely erased. Last month, the department held a hearing to discuss the issue and consider changing the rules.