After announcing broad student-loan forgiveness, Biden's Education Department wipes out $1.5 billion in student debt for borrowers subjected to 'manipulation' by a for-profit school
- The Education Department announced $1.5 billion in student-loan forgiveness for 79,000 Westwood College students.
- Westwood shut down in 2016, and the department said it misrepresented job prospects to students.
President Joe Biden may have announced one-time blanket student-loan forgiveness, but that doesn't mean he's done helping borrowers who attended fraudulent for-profit schools.
On Tuesday, Biden's Education Department announced it has approved $1.5 billion in student-debt relief for 79,000 borrowers who attended Westwood College. The department found that Westwood, a for-profit school that shut down in 2016, engaged in "widespread misrepresentations about the value of its credentials for attendees' and graduates' employment prospects," according to a press release, warranting a group approval of borrower defense claims filed by former students, which are claims borrowers can file if they believe they were defrauded by a for-profit school.
This relief will be granted to borrowers enrolled in any location of Westwood, including its online program, between January 1, 2002, and November 17, 2015, and borrowers will not need to take any additional action on their part. This also applies to those who did not submit individual borrower defense claims themselves.
"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," Under Secretary of Education James Kvaal said in a statement. "The Biden-Harris Administration will continue ramping up oversight and accountability to protect students and taxpayers from abuse and ensure that executives who commit such harm never work at institutions that receive federal financial aid again."
Specifically, the attorney generals of Colorado — where Westwood's owner was based — and Illinois found that Westwood made false claims about its students' job prospects, leading the department to approve borrower defense claims for those students prior to Tuesday's announcement. Federal Student Aid Director Richard Cordray said in a statement that the partnerships with the attorneys general "enable us to uncover the actions of dishonest institutions, like Westwood College."
Advocates have had their eyes on the school over the past years, as well. Student Defense — an organization that advocates for borrowers' rights — filed a lawsuit in May on behalf of former Westwood students who had been waiting nearly six years for their borrower defense claims to be approved, and Dan Zibel, vice president and chief counsel of the group, told Insider this relief was a long time coming.
"It never should have taken this long — or litigation — for the Department of Education to do the right thing, but we are thrilled that the department has finally discharged the loans of defrauded Westwood College students," Zibel said. "This move means thousands of borrowers are finally free from the loans they took on based in part on Westwood's lies and misrepresentations. While this won't make up for the lifelong damage the school has caused, it is welcome and overdue financial relief for students who shouldn't have to continue worrying about this debt."
Tuesday's announcement follows the department's approval of its two largest group discharges to date for students who attended the major for-profit schools, ITT Technical Institute and Corinthian Colleges. It also comes at a consequential time for millions of federal student-loan borrowers — Biden last week announced up to $20,000 in student-loan forgiveness for Pell Grant recipients making under $125,000 a year, and up to $10,000 in relief for other federal borrowers.