Department of Education writes off $415 million in student debt tied to for-profit colleges

(AP) – The Biden administration announced Wednesday that it will forgive more than $70 million in student debt for borrowers who say they were defrauded by the for-profit DeVry University – the first time the Department of Education approved such claims for an institution that is still in operation.

At least 1,800 former DeVry students will get their loans after the department found the school lied about its graduates’ success in order to entice new students to enroll. The agency said it plans to force the school to cover the cost of the $71.7 million loan repayment. The action was part of a larger $415 million tranche of loan relief for former students of for-profit colleges.

“Students rely on the sincerity of their colleges,” Education Secretary Miguel Cardona said in a statement. “Unfortunately, today’s findings show too many cases where students have been misled by loans from institutions or programs that have failed to deliver on their promises.”

DeVry spokeswoman Donna Shaults said the allegations predate the school’s current board and leadership. The company was sold in 2018, while the Biden administration’s allegations include a period ending in 2015.

“Nevertheless, we believe the Department of Education is misrepresenting DeVry’s calculation and disclosure of graduate results in certain advertisements, and we disagree with the conclusions they have reached,” Shaults said in a statement. communicated.

Along with the DeVry action, the Department of Education also decided to cancel $344 million in loans for former students of ITT Tech, Westwood College, Corinthian Colleges and other former for-profit colleges. .

It marks another step in the administration’s work to clear a backlog of claims in the Borrower Defense Program, which forgives debt for students who are defrauded by their colleges.

The program has been used to write off the $2 billion in debt of more than 107,000 borrowers, but so far has only provided relief to students after their colleges have closed, leaving taxpayers to cover loan repayments. But in the coming weeks, the Department of Education said it would take steps to hold DeVry financially accountable.

“While helping students is essential, we also want to deter wrongdoing and protect taxpayers,” James Kvaal, undersecretary for the Department of Education, said on a media call.

According to the agency, DeVry made false claims about the success of his graduates from 2008 to 2015.

The school claimed that 90% of its graduates found employment in their field of study within six months of graduation. It became the center of a national advertising campaign with the slogan “We Major in Careers”.

But the Ministry of Education says the actual placement rate was 58%. More than half of the jobs included in the school’s figure were held by students before they graduated or even enrolled, the agency said. He also alleged that senior DeVry officials knew about the problems with the cipher but continued to use it for years.

Similar Federal Trade Commission allegations led to a $100 million settlement with DeVry in 2016.

The Department of Education has identified about 1,800 borrowers who will be eligible for loan releases because they relied on DeVry’s inflated demand in their decision to enroll. The number is expected to increase as the agency continues to review applications.

The department’s action will also erase student debt for 1,600 borrowers who attended Westwood College, which had 15 campuses before it closed in 2015. The agency found that Westwood also misled students about their likelihood of getting a jobs and good salaries after graduation.

Another 130 former ITT Technical Institute students will receive $3 million in forgiven loans in the latest round of approvals. In the decade before it closed in 2016, the company falsely told students that its nursing program had or would soon gain accreditation, according to the department. But the school has repeatedly failed to gain accreditation, which plays a key role in helping graduates find jobs.

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