Loan relief approved for more for-profit college students

Jul 9, 2021, 8:42 AM | Updated: 9:25 am

The U.S. Education Department on Friday announced it will forgive student loans for more than 1,800 borrowers who attended a trio of for-profit colleges that made false recruiting claims and left many students unable to find jobs.

The Biden administration is erasing more than $55 million in debt for former students of Westwood College, the Marinello Schools of Beauty and the Court Reporting Institute. All three chains have been closed for years after facing accusations of fraud and deception in their advertising.

It is another step in the Education Department’s effort to clear a backlog of claims in the borrower defense program, which offers loan forgiveness to students who were defrauded by their schools. Applications piled up when the Trump administration stalled the program while it rewrote the rules, leaving a current backlog of more than 100,000 pending claims.

“The department will continue doing its part to review and approve borrower defense claims quickly and fairly so that borrowers receive the relief that they need and deserve,” Education Secretary Miguel Cardona said in a statement.

He added that the new round of approvals should “serve as a warning to any institution engaging in similar conduct that this type of misrepresentation is unacceptable.”

Most of the newly approved claims are for former students of Westwood College, which had campuses across the country before its closure in 2015. The chain told students their course could be transferred to other colleges, but that often was not the case, the Education Department said. It left many students stuck starting their college careers all over again after they transferred.

The company also made false claims about a criminal justice program in Illinois, saying graduates could get jobs as police officers in the Chicago area, the department said. But many police agencies didn’t accept credits from Westwood, leaving many graduates to accept minimum wage jobs in other fields.

About 200 of the loan discharges are for the Marinello Schools of Beauty, which closed in 2016 after the federal government cut off its funding. The college had a history of failing to deliver the education it promised, the department said, in some cases leaving students without instructors for months. As a result, some cosmetology students never learned key skills like how to cut hair, and many had difficulty passing state licensing tests.

The department approved 18 claims from the Court Reporting Institute, which had locations in Washington, California and Idaho before shutting down in 2006. The college was found to have lied about the amount of time required to complete its training to become a court reporter. Only about 6% of students actually ended up graduating, the department found, and those who did took much longer than the college said it would.

Last month, the Biden administration erased student debt for more than 18,000 borrowers of the ITT Technical Institute, another defunct for-profit college. And it March, it cleared $1 billion in debt for former students of ITT and the Corinthian Colleges chain. In total, the administration has granted claims totaling $1.5 billion for nearly 92,000 borrowers.

The borrower defense program is among several targeted for an overhaul by the Biden administration as it seeks to undo Trump-era policies. Former Education Secretary Betsy DeVos issued new rules meant to scale back loan forgiveness, which she said had become too easy to obtain.

DeVos also implemented a new formula that offered only partial loan relief even if claims were granted. Cardona rescinded that formula in March and said all borrowers granted relief would get their loans erased in full. The department held a hearing on the topic last month as it considers changing the rules.

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Loan relief approved for more for-profit college students