- The U.S. Department of Education announced on Wednesday it will cancel 415 million dollars indebted to nearly 16,000 defrauded student borrowers who attended several for-profit colleges, including one currently in operation, DeVry University.
- Wednesday’s announcement marks the first time the Department of Education has provided a type of debt relief known as borrower defense to defrauded students who attended an institution that remains open and continues to attend. access federal Title IV financial assistance.
- Department officials said they would attempt to recover landfill costs from DeVry. DeVry alumni outflows total $71.7 million, and officials expect that number to rise as they approve more claims for redress.
Overview of the dive:
Biden’s education department inherited a large number of applications from borrowers seeking debt relief under a law called borrower defense to repayment.
This provision offers loan forgiveness to those whose institutions have misled them about key aspects of their programs, such as credit transferability or job prospects.
With Wednesday’s news, the Biden administration approved the set-off of about $2 billion in loan debt for about 107,000 students through borrower advocacy, including about 1,800 former DeVry students.
Often, the borrower’s defense has been invoked by former students of for-profit schools. The Trump administration has reversed that process, with former Education Secretary Betsy DeVos creating a rule that increases the burden of proof on borrowers. It has also stopped processing requests for relief.
DeVos in 2019 was sued by a defense organization that asked her to deal with bad debts. The case is ongoing under Education Secretary Miguel Cardona.
The Department of Education said it was moving quickly to ease student debt burdens by reworking borrower defense regulations and addressing outstanding relief requests.
Wednesday’s action benefits DeVry students who enrolled from 2008 to 2015, years when the department said the for-profit college falsely advertised that 90% of its students had obtained jobs in their fields in the six months after graduation. The actual placement rate was actually less than 60%, the ministry said.
DeVry has already settled for $100 million with the Federal Trade Commission in 2016 on similar claims of misleading advertising.
The university “is deeply committed to student success and has focused our entire organization on helping to compete in a complex and changing job market,” DeVry spokeswoman Donna Shaults said. in an email. Saults noted that requests for relief predate his current leadership.
“Nevertheless, we believe the Department of Education is misrepresenting DeVry’s calculation and disclosure of graduate results in certain advertisements, and we disagree with the conclusions they have reached,” Shaults said.
Department of Education officials told reporters on Wednesday they would seek to recover the loan release fee from DeVry’s current owners. DeVry’s former owner, Adtalem Global Education, sold it in 2018.
Under a 2016 settlement with the ministry, DeVry was to send a letter of credit to the agency worth more than $68 million. However, Adtalem said in U.S. Securities and Exchange Commission filings, the letter of credit, expired in fiscal year 2022.
DeVry will be able to continue to access Title IV money, which ensures that it can remain open.
Also on Wednesday, the department approved claims of $53 million for 1,600 students who attended the defunct for-profit Westwood College. The department found that the institution misled students about salary potential and employment opportunities from 2002 to 2015, when the college closed.
It also provided $3 million in loan relief to about 130 borrowers from ITT Technical Institute’s nursing program, and the same amount to 270 students who attended Globe University and the Minnesota School of Business. Both for-profit networks have closed.
Another $284.5 million in landfills will go to more than 11,900 students who attended other institutions.