US Wipes Out $55.6M in Loans Owed By Misled Students

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The Education Department said Friday it will forgive $55.6 million in loans owed by former students of three for-profit schools that took advantage of them with misleading representations.

Most of the 1,800 approved claims came from former students of Westwood College, which the department said misled people about their career prospects and their ability to transfer credits to other schools. Marinello Schools of Beauty misrepresented the type of instruction offered at its schools, and Court Reporting Institute misstated how long it would take to complete its program, the department said.

The claims, made under the Education Department’s borrower defense provision, were the first since 2017 involving students who did not attend Corinthian Colleges, ITT Technical Institute, or American Career Institute.

“The Department will continue doing its part to review and approve borrower defense claims quickly and fairly so that borrowers receive the relief that they need and deserve,” Education Department Secretary Miguel Cardona said in a statement. “We also hope these approvals serve as a warning to any institution engaging in similar conduct that this type of misrepresentation is unacceptable.”

Together with two larger rounds of forgiveness granted earlier this year, nearly 92,000 borrowers have now received more than $1.5 billion in borrower defense cases since President Joe Biden took office in January. Borrower defense lets people receive full or partial forgiveness of their student loans if their schools misled them or engaged in other misconduct. Borrower defense has existed since the mid-1990s but was rarely used until former President Barack Obama’s administration expanded the rules in 2016, when the closure of for-profit Corinthian Colleges caused an influx of claims.

Cardona has said he wants to take a more generous stance toward easing student loan debt, particularly in borrower defense cases. This represents a shift away from policies set by Cardona’s predecessor, Betsy DeVos, who under then-President Donald Trump enacted a stricter formula for judging the amount of forgiveness claims could receive. The Biden Administration is considering further changes to the rules on borrower defense as well as public input from a series of hearings in June.


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