Biden Admin pardons $72M in loans for students wronged by one school.
The Biden Administration Cancels $72 Million in Student Loans for Cheated Students
The Biden administration has taken another step towards providing relief to student borrowers by canceling $72 million in student loans. This decision comes after thousands of students were “cheated” by Ashford University, an online for-profit school based in San Diego.
About 2,300 student borrowers who attended Ashford University will have their debt wiped away. The Department of Education announced this significant move in a statement on Wednesday. Ashford University has since been acquired by the University of Arizona.
This latest batch of debt relief follows the Supreme Court’s ruling in June, which struck down President Biden’s $430 billion student debt relief plan. The plan aimed to forgive the loans of 40 million people. Despite this setback, the Biden administration has now forgiven a total of $116 billion in student debt for over 3.4 million individuals.
The $72 million in loan forgiveness is the result of the Department of Education’s review of a 2017 lawsuit brought against Ashford University by the California Department of Justice. The lawsuit alleged that the school had misled students about tuition costs, employment potential, and used aggressive recruiting methods.
Ashford students filed borrower defense claims, stating that they were defrauded by the school. These claims can lead to loan forgiveness if approved. A judge ruled that Ashford University made 1.2 million misrepresentations to students between 2009 and 2020, imposing a civil penalty of $22.3 million. The school is currently appealing the ruling.
The court’s decision highlighted the school’s unethical practices, stating that Ashford University had a high-pressure admissions department focused on enrollment numbers. Admissions counselors were willing to cross ethical boundaries to boost numbers and secure their jobs.
“As the California Department of Justice proved in court, Ashford relied extensively on high-pressure and deceptive recruiting tactics to lure students,” said Under Secretary of Education James Kvaal in Wednesday’s statement. “Today we are protecting the students who were cheated by Ashford, and we will also hold the perpetrators accountable, protect taxpayers, and deter future wrongdoing.”
California Attorney General Rob Bonta expressed gratitude towards the Biden-Harris Administration for changing the lives of thousands of former Ashford students. He described what Ashford University did to its students as “unconscionable and illegal.”
Continued Efforts for Student Loan Relief
Since the Supreme Court’s decision, President Biden has been determined to find alternative ways to provide relief to student borrowers. In an email to student loan holders, the administration even criticized the Supreme Court’s ruling, stating that they “got it wrong” on student debt.
Last month, the administration outlined several immediate debt relief actions. One of these actions is the Saving on a Valuable Education (SAVE) plan, which will reduce monthly payments to $0 for millions of low-income borrowers. Additionally, the administration aims to protect borrowers from negative consequences, such as a hit to their credit score, when the student loan payment pause ends this fall.
The Biden administration remains committed to finding solutions and delivering relief to hard-working middle-class families burdened by student loan debt.
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