Tuesday saw the announcement of a $130 million automatic debt discharge for 7,400 Colorado student loan debtors who attended CollegeAmerica by the Education Department and the Colorado Attorney General.
The Center for Excellence in Higher Education (CEHE), the parent company of CollegeAmerica, was found to have lied about graduate salaries and employment rates, its programs, and the conditions of private loans it provided borrowers, according to information gathered by the Colorado attorney general’s office.
The action marks a reversal of the previous administration’s actions and is the latest attempt by the Biden administration to offer redress to borrowers affected by predatory schools’ misdeeds.
According to a press release from the Education Department’s Federal Student Aid division, Richard Cordray, “this announcement provides a fresh start for thousands of students harmed by CollegeAmerica’s widespread misconduct.” We’ll keep working to provide borrowers with targeted student loan relief who have unfair treatment from their schools.
Between January 1, 2006, and July 1, 2020, those who were eligible were enrolled at CollegeAmerica campuses with a Colorado presence. Senior department officials noted in a press teleconference that it doesn’t apply to borrowers that attended CollegeAmerica campuses outside of Colorado.
Additionally, discharge solely pertains to federal student loans; it does not apply to private or commercial FFEL loans.
If a school “engaged in certain misconduct associated to the making of a federal loan or the educational services it provided,” which caused harm, according to Federal Student Aid, eligible borrowers will be notified in August and will be granted relief even if they have not submitted a borrower defense application.
According to the Department, remaining loan amounts will be canceled out, trade lines on credit bureaus will be removed, and borrowers that made any payments would receive a refund.
The campuses of Colorado CollegeAmerica ceased taking in new students in 2019, shuttered in September 2020, and all other CEHE campuses followed suit in August 2021.
When an average graduate earned $25,000 five years after graduation, or “less than the salaries of high school grads publicized by the school,” the inquiry by the Colorado AG found that CEHE’s promotional materials included falsely high salaries. Additionally, it discovered that CEHE fabricated and overstated job placement rates.
Additionally, while knowing that 70% of Colorado CollegeAmerica customers had defaulted on their loans, CEHE misled borrowers that its private loan product was reasonable. Additionally, it stated that graduates will receive certifications to work as X-ray technicians despite the fact that the institution lacked any X-ray equipment.
Attorney General of Colorado Phil Weiser stated in a press release that “CollegeAmerica knowingly exploited students by luring them into expensive, low-quality programs with promises of high earning potential and job placement that it knew were not attainable.” Our office’s top priorities will continue to be safeguarding borrowers from predatory lending and assisting Coloradans in managing their student loan obligations.
The 1.1 million borrowers whose institutions exploited them or abruptly closed have been granted $14.7 billion in relief by the Biden-Harris administration. This includes offering tens of thousands of borrowers a new start with loans they obtained from ITT Technical Institute and Corinthian Colleges.
Under the Borrower Defense Loan cancellation program, borrowers who have been deceived or whose school has “involved in other misconduct in breach of certain state laws” may request for loan cancellation.
After the Obama administration pushed down on unscrupulous for-profit colleges in 2015 and instituted new rules, those applications skyrocketed. But under previous Education Secretary Betsy DeVos, the system for misled borrowers seeking debt relief collapsed during the Trump administration.
Under the Biden administration, that has altered.
For instance, the Education Department cancelled 79,000 former deceived students’ $1.5 billion in student loans who attended for-profit Westwood College. Loan cancellations for past students at DeVry University, Corinthian College, and ITT Tech have previously been announced by the department.
For 1.1 million debtors whose universities took advantage of them or abruptly closed, the Biden administration has granted $14.7 billion in relief.
Inquiries regarding this discharge or other borrower defense remedies should be directed to the Education Department’s hotline at (855) 279-6207.