Dive Brief:
- The U.S. Department of Education announced Tuesday that it will automatically forgive $1.5 billion in student loans for roughly 79,000 borrowers who attended Westwood College, a for-profit chain that closed in 2016.
- Westwood borrowers are entitled to relief because the institution “engaged in widespread misrepresentations” about the value of its credentials and students’ employment prospects, the Education Department said.
- Students who attended any Westwood College location or enrolled in its online program between Jan. 1, 2002 and Nov. 17, 2015 will receive full federal loan discharges. They will not have to apply for relief.
Dive Insight:
The Education Department’s action comes less than a week after the Biden administration announced a widespread student loan relief program cancelling up to $10,000 in debt for most borrowers and $20,000 for Pell Grant recipients.
Although that action wasn’t tied to alleged misbehavior at any institution, the agency has also been forgiving the student loans of many borrowers who say they were misled by the colleges they attended. That includes those who attended the for-profit chain Corinthian Colleges and ITT Technical Institute, which both collapsed around the same time as Westwood.
Biden's administration has now granted $14.5 billion in debt relief for “borrowers whose colleges took advantage of them,” according to Tuesday’s announcement.
“Westwood College’s exploitation of students and abuse of federal financial aid place it in the same circle of infamy occupied by Corinthian Colleges and ITT Technical Institute,” James Kvaal, the Education Department's top higher education official, said in a statement. “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 relief is based upon a two-year department investigation into Westwood, which found that the institution inflated graduates’ job placement rates and earnings outcomes in order to attract students. The institution also falsely pledged to pay students’ bills if they didn’t find work within six months of completing their programs, according to the department.
Previously, the Education Department used these findings to approve roughly $130 million in loan forgiveness for 4,000 borrowers under the borrower defense to repayment regulation, which allows them to apply for relief if their institutions misled them.
The Education Department has faced lawsuits over the agency’s handlings of these claims. The National Student Legal Defense Network, a student advocacy group, sued the department earlier this year, arguing that the Education Department still hadn’t made a decision on a 2016 group borrower defense application requesting relief for Westwood students.
In a statement, Daniel Zibel, the organization’s co-founder and chief counsel, said Tuesday’s announcement was welcome but overdue.
"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.”
