Wednesday, January 19, 2022
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Student Loans Wiped Out for Borrowers at Three Institutions

Just weeks after the Education Department erased half a billion dollars in student debt for borrowers defrauded by their schools, the agency said on Friday it would discharge another $55.6 million for students at three other institutions.

Roughly 1,800 students — at Westwood College, Marinello Schools of Beauty and the Court Reporting Institute — will have all of their debts discharged as part of the so-called borrower defense program, which allows loan holders to file claims to have their debt forgiven if they believe they have been scammed.

The Biden administration has now canceled more than $1.5 billion in loans for more than 92,000 borrowers under the program, a significant shift from the previous administration, during which relief efforts largely came to a standstill. And the latest approvals widened the scope of relief beyond a small group of schools.

Friday’s approvals were the first since 2017 that wiped out debts at schools other than Corinthian Colleges, ITT Technical Institute and American Career Institute. Those three for-profit institutions are now defunct.

“The department will continue doing its part to review and approve borrower defense claims quickly and fairly so that borrowers receive the relief that they need and deserve,” said Miguel Cardona, the education secretary. “We also hope these approvals serve as a warning to any institution engaging in similar conduct that this type of misrepresentation is unacceptable.”

Former Westwood students accounted for the bulk of the relief delivered on Friday. The department approved more than 1,600 claims from them, totaling roughly $53 million, which involved two types of misrepresentation. The agency said that between 2002 and the school’s closure in 2015, Westwood misled students about their ability to transfer credits. A second group of borrowers, in the criminal justice program, were misled about their job prospects in law enforcement in Illinois, the department said. Many agencies would not accept their credits, and borrowers had to accept minimum wage jobs instead of positions they thought they had trained for.

Another 200 claims approvals wiped out more than $2.2 million in debts tied to Marinello Schools of Beauty. Students who attended from 2009 through the school’s shuttering in 2016 said they were misled about classes and training that were supposed to be offered but never were. The department said that had made it “extremely difficult” for them to pass required state licensing tests.

Education Department officials also found widespread misrepresentations at the Court Reporting Institute, where it approved 18 claims totaling $340,000. From 1998 through its closure in 2006, the school misinformed borrowers about how long it would take to complete the program, the department found. The majority of students never finished.

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