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Why was $55.6 million in student debt cancelled by the Biden administration?

The Department of Education on Friday said it is canceling $55.6 million in student loan debt for 1,800 victims of fraud by three for-profit colleges.

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Why was $55.6 million in student debt cancelled by the Biden administration?
OLI SCARFF AFP

The Biden administration took another bite out of the backlog of pending petitions for student loan forgiveness, giving another $55.6 million in relief to 1,800 students who were defrauded by three for-profit institutions. This brings the total to over $1.5 billion the Department of Education has canceled.

The Biden administration inherited numerous claims under the “borrower defense to repayment” statute, some dating back to the Obama administration, that piled up under the Trump administration. Measures put into place by the Obama administration to place the burden onto schools and streamline the process for students were undone under former Secretary of Education Betsy DeVos.

Federal loans pardoned for 1,800 students of three defunct schools

The Department of Education announced on Friday that 1,800 students who attended Westwood College, Marinello Schools of Beauty and the Court Reporting Institute would have their federal student loans fully forgiven. This follows the approval of more than $1.5 billion in loan forgiveness for nearly 90,000 held by former ITT Technical Institute and Corinthian Colleges students in recent months.

Westwood College

The bulk of the forgiven debt, around $53 million, will go to 1,600 former students of Westwood College which shuttered in 2015. The school had campuses from coast to coast, is accused of widespread misrepresentations about the ability of students to transfer credits. This forced students who transferred to other institutions to restart their studies from scratch at a different school.

The Department of Education also claims that the institution misled students in its criminal justice program about the prospect of employment as police officers in Illinois upon graduation. Credits from the school were not accepted by the Chicago Police Department and other law enforcement agencies forcing students to accept minimum wage jobs or jobs that required no degree at all, leaving them worse off for having attended the school.

Marinello Schools of Beauty

More than $2.2 million in loan forgiveness was granted to over 200 former students of Marinello Schools of Beauty. The Department found that between 2009 and 2016, when the institution closed, students were misled about the type of instruction that would be offered. Borrowers claim that the schools failed to teach them key elements of a cosmetology program, like cutting hair. Additionally, the institution would leave students without in instructors for weeks or months at a time. This made it difficult for the students to pass necessary state licensing tests in order to earn a living from their education.

Court Reporting Institute

The agency approved 18 claimants’ request to cancel around $340,000 in student loan debt acquired at the Court Reporting Institute. The majority of students were never able to complete the program according to the Education Department. Only about two to six percent of students at the school’s three locations in Washington, California, and Idaho graduated, and those that did finish the program took much longer to do so than the institution claimed.