Nearly $1.5 billion in remaining student loan debt for the now-defunct for-profit Westwood College will be discharged, the Department of Education announced Monday.
The move extends relief to some 79,000 borrowers and applies to debt taken between Jan. 1, 2002, and Nov. 17, 2015, when the institution ceased “enrolling new borrowers” in anticipation of its closure the following year. The “school engaged in widespread misrepresentations” to justify the debt cancellation, the Department of Education said.
BIDEN ADMINISTRATION CANCELS $3.9 BILLION IN STUDENT LOANS TO DEFUNCT FOR-PROFIT INSTITUTION
“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,” undersecretary James Kvaal said. “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 Westwood debt cancellation applies to borrowers without any further action, “regardless of whether they have applied for a borrower defense discharge,” per the department.
Westwood promised students they would enjoy employment in their field within six months of graduating, but it relied on marketing content that misrepresented data about the salary outcomes of its students, the department alleged, citing findings over the past two years.
Additionally, the college made an “employment pledge” to prospective students, insinuating it would give graduates financial assistance if they failed to land jobs within six months of graduation, but the department said it found no evidence Westwood made good on that promise.
Westwood included campuses in California, Colorado, Georgia, Illinois, and Virginia, as well as an online program. The institution ultimately announced in 2015 that it would shutter its doors based on government regulations and low enrollment numbers, Inside Higher Ed reported.
Since President Joe Biden took office, the Education Department has combed through scores of requests from alumni of for-profit colleges hoping for debt relief under “borrower defense to repayment,” which provides financial alleviation to students whose institutions mislead them.
The debt cancellation announced Monday brings the department’s total loan relief for “borrowers whose colleges took advantage of them” up to $14.5 billion for almost 1.1 million borrowers, the department said, including the Biden administration’s cancellation of $3.9 billion in outstanding student debt for attendees of ITT Technical Institute, another former for-profit college that has shuttered its classrooms, earlier this month.
“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.
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Last week, Biden unveiled a plan a program to nix $10,000 of federal student loans from borrowers with an annual income of $125,000 or less, as well as $20,000 for borrowers who were eligible for Pell Grants. Biden also pushed back the moratorium on federal student loan payments to Dec. 31. The White House predicts the relief program will cost $240 billion over the next 10 years.
Biden had long faced hefty pressure from his base from progressives such as Rep. Alexandria Ocasio-Cortez (D-NY) to cancel all student loan debt. His announcement was met with fierce backlash from Republicans, as well as some opposition from a handful of Democrats in tight reelection races. Republicans are expected to take legal action in a bid to stop the program.
