Biden Administration Approves $1.5 Billion In New Student Loan Forgiveness For 79,000 Borrowers Misled By Their School

The Biden administration on Tuesday announced a new wave of student loan forgiveness approvals for borrowers who attended a for-profit school that allegedly engaged in widespread misconduct. Here are the details.

Student loan forgiveness for 79,000 borrowers who attended Westwood College

The Education Department will be canceling the federal student loan debt for 79,000 borrowers who attended Westwood College. Westwood College was a private, for-profit chain of educational institutions that had 15 campus locations in five states, as well as an online program. The college closed in 2016.

The Department, after evaluating evidence of misconduct (much of which was gathered by state attorneys general offices in Illinois and Colorado) concluded that Westwood “engaged in widespread misrepresentations about the value of its credentials for attendees’ and graduates’ employment prospects such that all borrowers who attended during the period described above are entitled to a full loan discharge,” according to a Department of Education press release.

“Westwood College’s exploitation of students and abuse of federal financial aid place it in the same circle of infamy occupied by [similar institutions],” said Under Secretary James Kvaal in a statement on Tuesday.

“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. 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.”

Related: Are You Eligible for Closed School Loan Discharge?

Who qualifies for the Westwood student loan forgiveness

Borrowers who attended Westwood Colleges, including the online program, between January 1, 2002, through November 17, 2015, will be eligible to have their associated federal student loans canceled.

The relief is being provided through the Borrower Defense to Repayment program, a federal student loan forgiveness program that can cancel the student loan debt for borrowers who were misled or defrauded by their school.

While normally, borrowers must submit a formal Borrower Defense to Repayment application outlining their allegations as to how the school misrepresented core aspects of their program, the Education Department has indicated that borrowers will be eligible for the relief “regardless of whether they have applied for a borrower defense discharge. Relief will be granted without any additional actions by the borrowers.”

The Education Department anticipates that $1.5 billion in student loan forgiveness will ultimately be approved under the initiative.

Gross misrepresentation by the college

The Education Department found that Westwood “routinely misled prospective students by grossly misrepresenting that its credentials would benefit their career prospects and earning potential” and “presented grossly inflated job placement rates.”

Practices to recruit students for Westwood’s criminal justice program were particularly egregious, according to the Department, and included promises that prospective students “could expect jobs with law enforcement in Illinois, including the Chicago Police Department or the Illinois State Police Department,” even though Westwood did not have the accreditation required to meet state employment requirements. 

Loan relief for students

“Strong partnerships between the Department and state attorneys general enable us to uncover the actions of dishonest institutions, like Westwood College,” said Federal Student Aid Chief Richard Cordray.

“Thanks to the valuable assistance of Attorneys General Phil Weiser of Colorado and Kwame Raoul of Illinois, we are delivering loan relief to all Westwood students who put their trust in an institution that decided to take advantage of them.”

Related: How President Biden Canceled At Least $200 Billion of Student Loans Without Congress

Advocacy groups praise the student loan forgiveness initiative

Advocacy organizations praised the Biden administration for the new initiative.

“We are glad that the Department of Education is finally providing long overdue relief to Westwood students,” said Kyra Taylor, staff attorney at the National Consumer Law Center (NCLC) in a statement.

“For years, the Department of Education has been aware of how Westwood College lied to prospective students about their graduates’ employment prospects when enrolling them. By deciding to provide automatic relief, without an application, the Department is ensuring that harmed borrowers will not be left out of relief because they did not know how to apply.”

“Today’s announcement will provide much-needed relief particularly to Black and Latinx communities who were disproportionately enrolled in Westwood’s sham Criminal Justice program,” said Genevieve Torres, associate director of the Educational Opportunities Project with the Lawyers’ Committee for Civil Rights Under Law.

“They bear the substantial harms from unaffordable debt compounded by generations of discriminatory policies that strip wealth from communities of color.”

Earlier this year, NCLC, the Lawyers Committee for Civil Rights Under Law, and the National Student Legal Defense Network filed a lawsuit against the Department seeking relief for defrauded Westwood students.

Westwood relief is the latest student loan forgiveness for borrowers defrauded by for-profit schools

The Biden administration’s plan to wipe out the federal student loan debt for borrowers who attended Westwood College is just the latest in a series of steps officials are taking to provide relief to students who were misled by for-profit schools.

Earlier this month, the Education Department announced it was approving $4 billion in group discharge relief for borrowers who attended ITT Technical Institutes, another national chain of for-profit colleges that collapsed in 2016 following widespread allegations is fraud. Over 200,000 borrowers who attended ITT programs between January 1, 2005, through its closure in September 2016 are expected to benefit.

And in June, the administration approved $6 billion in federal student loan relief for 560,000 borrowers who attended Corinthian Colleges. The Education Department announced that this was the largest group discharge initiative in history.

As with the Westwood relief, the student loan forgiveness for borrowers who attended ITT and Corinthian Colleges will be provided automatically, without borrowers needing to submit a formal Borrower Defense to Repayment application.