Former University of Phoenix students see $37 million in student debt canceled by Biden

Washington
CNN
—

The Biden administration is canceling nearly $37 million in federal student loans for more than 1,200 borrowers who attended the University of Phoenix as it found the for-profit school misled students about their prospects. ‘job.

Taking a narrower approach to student debt forgiveness, the Biden administration continued to forgive some borrowers’ debts under existing programs after the Supreme Court blocked its broad student loan forgiveness program which promised to forgive up to $20,000 for low- and middle-income borrowers.

Similar to Wednesday’s announcement regarding the University of Phoenix, the Department of Education in August canceled $72 million in federal student loans for more than 2,300 borrowers who attended the for-profit Ashford University in California.

In total, the administration has canceled more than $117 billion of the nearly $1.7 trillion in unpaid federal student debt since 2021.

Former University of Phoenix students now eligible for debt relief were enrolled at the school between September 21, 2012 and December 31, 2014 and have already applied for loan forgiveness under a program called defense of the borrower until repayment. The program has been in place for decades and allows people to seek debt relief if they believe their university misled or defrauded them.

Based on an investigation by the Federal Trade Commission, the Department of Education found that the University of Phoenix falsely represented that its partnerships with thousands of companies, including Fortune 500 companies, would give students hiring preferences.

“The University of Phoenix brazenly deceived prospective students with false advertisements to entice them into enrolling,” Richard Cordray, director of operations for Federal Student Aid, said in a statement.

“Students who trusted the school and wanted to improve their lives through education ended up with tons of debt and useless degrees,” he added.

The University of Phoenix did not immediately respond to a request for comment.

The Department of Education said it will notify eligible borrowers by early October that their debt relief requests have been approved. The government will ask student loan servicers to suspend loans for affected borrowers until the debt is officially canceled.

Borrowers whose loans are in forbearance will not be required to make payments, even after the pandemic-related freeze on federal student loan payments ends in October.

Other former University of Phoenix students who believe they were similarly affected during those years can still apply for student debt relief under the defense of the borrower program on the Federal Student Aid website.

The Biden administration has made it easier for borrowers to apply for federal student loan forgiveness from various existing programs. It expanded eligibility for the Public Service Loan Forgiveness program, which forgives public sector workers’ outstanding debts after making 10 years of qualifying payments, and makes a one-time account adjustment that will result in the cancellation of the debt of borrowers who have been paying for at least 20 years.

In August, the administration also launched a new income-driven repayment plan, known as Saving on a Valuable Education (SAVE), which will reduce monthly payments and the amount repaid over time for borrowers eligible for student loans.