In a move aimed at providing financial relief to former students, the Biden administration’s Department of Education has announced that approximately $130 million in federal student loan debt would be forgiven for around 7,400 former students who attended CollegeAmerica between Jan. 1, 2006, and July 1, 2020.
President Biden on Tuesday said he is forgiving $130 million in student debt for 7,400 borrowers who attended CollegeAmerica in Colorado, a defunct for-profit college that shut down in 2020 after misleading students about their career prospects and loans. https://t.co/zIB4jueOYW
— CBS News (@CBSNews) July 25, 2023
The decision comes after an investigation led by Colorado Attorney General Phil Weiser shed light on concerning practices by CollegeAmerica’s parent company, the Center for Excellence in Higher Education. The evidence collected revealed widespread misrepresentations about graduate salaries, employment rates, program offerings, and terms of a private loan product.
CollegeAmerica, with campuses in both Colorado and Arizona, offered associate and bachelor’s degrees in various fields, including business, computer science, computer technology and medical assisting.
However, the investigation showed that the school enticed students into high-priced, low-quality programs, making “promises of high-earning potential and job placements that it knew were not attainable.”
“They basically tried to get people to sign up for degree programs that they knew weren’t going to deliver the results that they were promising,” stated AG Weiser, who initiated the investigation back in 2012. “ The internal data they had showed that students weren’t making this money, they didn’t get these jobs and they actually weren’t even getting the training they were promised.”
According to the results of the investigation, graduates earned a mere $25,000 on average five years after completing their programs, far below what was advertised. Additionally, despite claims of affordability, up to 70% of borrowers faced default on the school’s private loan product.
Now, federal student loan payments already received by the Department of Education from former CollegeAmerica students, federal student loan payments already received by the Department of Education will be refunded, and any remaining balances will be completely forgiven.
Former students do not have to submit an application to qualify for forgiveness.
This latest announcement marks a significant step in the administration’s commitment to addressing student loan debt.
When addressing the move in a statement on Tuesday, President Joe Biden used the opportunity to throw a jab at former President Donald Trump, saying, “While my predecessor looked the other way when colleges defrauded students and borrowers — I promised to take this on directly, and provide borrowers with the relief they need and deserve.”