Department of Education cancels $1.5 billion in loans for Westwood College borrowers

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The U.S. Department of Education announced on Tuesday it would forgive all remaining federal student debt for alumni of the now-defunct for-profit Westwood College, offering $1.5 billion in aid to 79,000 borrowers. .

The cancellation covers students who attended any location at Westwood College, including online programs, from Jan. 1, 2002, to Nov. 17, 2015, when the school halted enrollment before it closed in 2016.

Forgiveness will occur automatically whether or not former students have requested a Borrower Defense Release, the Department for Education said.

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“Westwood College’s exploitation of students and abuse of federal financial aid places it in the same circle of infamy occupied by Corinthian Colleges and the ITT Technical Institute,” said Undersecretary James Kvaal in the ad. “Westwood operated on a culture of false promises, lies and manipulation in order to profit from student debt that plagued borrowers long after Westwood closed.”

The department found that the school routinely misled prospective students by “grossly misrepresenting” the value of its degrees, including inflated placement rates and earning potential.

Additionally, Westwood College provided students with a fake “promise of employment,” pledging to help participants with post-graduation bills if they weren’t hired within six months, according to the findings.

Higher education expert Mark Kantrowitz told CNBC the latest discharge is “a continuation of work done by the Department of Education, using existing student loan forgiveness and discharge programs to address inequities.” .

The department has now approved $14.5 billion in student loan forgiveness for nearly 1.1 million borrowers that colleges have benefited from, the statement said.

“The Biden-Harris administration will continue to strengthen oversight and accountability to protect students and taxpayers from abuse and ensure that executives who commit such harm never again work at institutions that receive federal financial assistance,” Kvaal added.

James V. Hayes