Education Department to Forgive $415 Million in Student Loans

Student Loan
Student loan money. | Image by DNY59

The U.S. Department of Education announced on February 16 that they would forgive $415 million of student loans in borrower defense claims from nearly 16,000 former students who were allegedly misled by institutions of higher education.

According to the Department’s press release, the decision was made after the approval of new findings regarding institutions that misrepresented their job placement rates. The number includes 1,800 former students from DeVry University who will receive $71.7 million in forgiveness.

“The Department remains committed to giving borrowers discharges when the evidence shows their college violated the law and standards,” Secretary of Education Miguel Cardona said. “Students count on their colleges to be truthful. Unfortunately, today’s findings show too many instances in which students were misled into loans at institutions or programs that could not deliver what they’d promised.”

The remaining 14,000 students will receive around $343.7 million in borrower defense discharges for other institutions. These include Westwood College, ITT Technical Institute, and Minnesota School of Business/Globe University. According to the Department, these claims are the first to be approved for an institution still in operation.

The agency predicts that the number of claims will increase as pending applications are reviewed. The decision will bring the total of borrower defense relief to around $2 billion for over 107,000 students.

“When colleges and career schools put their own interests ahead of students, we will not look the other way,” Federal Student Aid Chief Operating Officer Richard Cordray said. “We are grateful to have strong enforcement and oversight partners, such as the Federal Trade Commission and attorneys general in Colorado, Illinois, and New Mexico. These offices provided key evidence that played a significant role in reaching the findings announced today. Moving forward, we intend to expand our collaboration with federal and state partners to serve students.”

The claims against DeVry University cite a national advertising campaign that claimed the institution had a job placement rate of around 90%. However, the jobs were not related to a DeVry degree, according to the Department.

“In fact, the institution’s actual job placement rate was around 58%,” the Department said. “The Department found that more than half of the jobs included in the claimed 90% placement rate were held by students who obtained them well before graduating from DeVry and often before they even enrolled.”

During the investigation, they discovered school officials knew about the issues with the statistics but did not address them.

The claims against Westwood College point to an “employment pledge” made by the school. The college promised to find students jobs within 6 months of graduation, with salaries of at least $50,000.

Fox 6 News reported that Donna Shaults, senior director of university relations at DeVry, noted in a statement that the university is under different leadership than it was in 2015. However, she maintained that the government had misrepresented the events.

“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,” Shaults declared.

“Once the Department reaches findings against an institution, it will continue to approve any applications it subsequently receives from borrowers who attended during the period of demonstrated misconduct and that raise allegations that are supported by the evidence we have reviewed,” the Education Department said. “As part of those ongoing reviews, the Department has already identified another approximately $284.5 million in discharges for over 11,900 students who attended institutions such as Corinthian Colleges, where the Department previously issued findings.”

According to the Department, they are currently working on new regulations that will provide more protections for students and taxpayers.

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