Students Misled by Universities Will Have Loans Canceled

Biden administration grants relief to those who claimed fraud by for-profit schools
By Newser Editors and Wire Services
Posted Feb 16, 2022 6:45 PM CST
Students Misled by Universities Will Have Loans Canceled
The entrance to DeVry University in Miramar, Fla., in 2009.   (AP Photo/J Pat Carter, File)

The Biden administration on Wednesday announced it will cancel more than $70 million in student debt for borrowers who say they were defrauded by the for-profit DeVry University— the first time the Education Department has approved such claims for an institution that’s still in operation. At least 1,800 former DeVry students will have their loans cleared after the department concluded that the school lied about the success of its graduates in order to get new students to enroll. The agency said it plans to force the school to cover the cost of the $71.7 million in loan discharges, the AP reports. The action was part of a broader installment of $415 million in loan relief for former students of for-profit colleges.

"Students count on their colleges to be truthful," Education Secretary Miguel Cardona said in a statement. "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." DeVry spokesperson Donna Shaults said the allegations predate the school's current board and leadership. The company was sold in 2018, while the Biden administration's allegations include a period that ends in 2015. Shaults said DeVry nevertheless disputes the department's conclusions.

The Education Department also moved to forgive $344 million in loans for former students of ITT Tech, Westwood College, Corinthian Colleges, and other defunct for-profit colleges. It marks another step in the administration's work to clear a backlog of claims in the borrower defense program, which forgives debt for students who are defrauded by their colleges. The program has been used to cancel $2 billion in debt for more than 107,000 borrowers, but until now it has only provided relief to students after their colleges shut down—leaving taxpayers to cover the loan discharges. "While it is critical to get students relief, we also want to deter wrongdoing and to protect taxpayers," said James Kvaal of the Education Department.

(More student loans stories.)

Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.