The Education Department said Tuesday it will grant full, automatic cancellation of $1.5 billion in education debt held by former students of the defunct for-profit chain Westwood College.
via: CBS News
Some 79,000 students who attended Westwood College, a private, for-profit institution that closed in 2016, will receive full student loan discharges. The department said in its announcement that evidence showed “the school engaged in widespread misrepresentations about the value of its credentials for attendees’ and graduates’ employment prospects.”
“Westwood operated on a culture of false promises, lies, and manipulation in order to profit off student debt that burdened borrowers long after Westwood closed,” said Under Secretary James Kvaal.
The action is the latest in an effort to help students who were defrauded by schools. Westwood students will not have to file a borrower defense claim, according to the department — the discharges will happen automatically.
Westwood, which had campuses in five states and offered online education, “routinely misled prospective students by grossly misrepresenting that its credentials would benefit their career prospects and earning potential,” the department said. The institution promised students they would be employed in their field within six months, inflated what it said graduates were making and job placement rates, as well as falsely promising students it would pay their bills if they could not find a job within six months, the department said.
The department worked with Colorado and Illinois, whose attorneys general collected evidence including “sworn statements from former students and employees, admissions call recordings, multi-media advertising, and Westwood’s internal communications, policies, and trainings.”
The department had earlier forgiven $3.9 billion in debt for students who attended ITT Technical Institute and $5.8 billion for students who attended Corinthian Colleges, both for-profit institutions.
The Trump administration had rewritten Obama-era rules to make it more difficult for borrowers to claim they were defrauded by students, but the Biden administration has reversed course, discharging $34 billion in debt for nearly 1.7 million borrowers under what is known as “borrower defense.”
The broader student loan relief — $10,000 for borrowers who make up to $125,000 annually and $20,000 for those who received Pell Grants, which are aimed at low-income students — is estimated to cost approximately $519 billion and will help approximately 43 million borrowers.
Some lawmakers have pushed back on President Biden’s executive action, arguing it is unfair to those who have paid off their student loans or didn’t go to college, and doesn’t address the underlying cost of college. The White House pushed back at some of its critics on Twitter, responding to Republican lawmakers with the amount of pandemic relief loans each received that were forgiven under the Paycheck Protection Plan program.
The Education Department said Tuesday it will propose new rules aimed at holding career programs accountable and new actions against institution they say have contributed to the student debt crisis, “including publishing lists of the worst actors.”
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