The U.S. Department of Education on Tuesday announced that it will forgive all outstanding federal student loans owed by former students of the long-gone for-profit Westwood College. This will save 79,000 borrowers $1.5 billion in interest payments.
The cancellation applies to anyone who attended Westwood College, in any location, including online courses, between January 1, 2002 and November 17, 2015, when the college ceased accepting new students in preparation for its closure in 2016.
The Education Department stated that the forgiveness will take place automatically, regardless of whether former students had requested a borrower defense discharge.
“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,” stated James Kvaal, an under secretary, in the announcement. “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 government discovered that the school habitually deceived potential students by “grossly misrepresenting” the worth of its credentials, including exaggerated job placement rates and earnings potential.
Additionally, according to the results, Westwood College gave students a fraudulent “employment pledge” that promised to assist them with post-graduation expenses if they weren’t hired within six months.
The most recent disclosure was made to CNBC by higher education expert Mark Kantrowitz is “a continuation of the work that the Department of Education has done, using existing student loan forgiveness and discharge programs to address inequities.”
According to the announcement, the government has now authorized the cancellation of $14.5 billion in student loans for roughly 1.1 million borrowers whose universities exploited them.
“The Biden-Harris Administration will continue ramping up oversight and accountability to protect students and taxpayers from abuse and ensure that executives who commit such harm never work at institutions that receive federal financial aid again,” Kvaal added.