Student Debt Forgiveness for CollegeAmerica Borrowers
The Biden administration is forgiving $130 million in student debt for 7,400 borrowers who attended the now-defunct CollegeAmerica, a Colorado-based private school whose parent company allegedly misrepresented graduates’ salary, employment rates, and other information.
Details of the Debt Cancellation
The debt cancellation specifically applies to borrowers who attended CollegeAmerica’s Colorado locations between January 1, 2006, and July 1, 2020. Although the school is permanently closed, the Center for Excellence in Higher Education (CEHE), its parent company, remains operational, as indicated on its website.
Background of CollegeAmerica’s Closure
CollegeAmerica abruptly shut down in 2021 after losing its accreditation. Since 2012, the Colorado Attorney General’s office has investigated CEHE and its leadership, culminating in a 2017 bench trial and a judgment in favor of the state.
Legal Findings Against CollegeAmerica
In August 2020, a Denver District Court judge found that CollegeAmerica’s marketing and admissions practices violated state consumer protection and consumer lending laws. Current Colorado Attorney General Phil Weiser stated that he requested the Department of Education (DOE) to cancel loans for qualifying students while the case was on appeal.
Investigation by the Department of Education
The DOE’s investigation revealed that CEHE misrepresented salaries, employment rates of graduates, and the terms of its private loan product. This misrepresentation has led to significant relief measures for affected borrowers.
Presidential Statement on Debt Relief
“From Day One of my administration, I promised to rebuild the middle class and to fight for hardworking American families. Today, we are taking another significant step to deliver on that promise by cancelling $130 million in debt for 7,400 student borrowers who attended CollegeAmerica in Colorado,” President Joe Biden remarked. “These borrowers were lied to, ripped off, and saddled with mountains of debt.”
Current Student Loan Repayment Landscape
The U.S. Supreme Court recently struck down the White House’s plan to forgive up to $20,000 of student debt per borrower for over 40 million Americans. Consequently, student loan repayments are set to resume in October after a three-year pause beginning in March 2020 due to the Covid-19 pandemic.
Overall Debt Relief Approvals
As of now, the Biden administration has approved $14.7 billion in debt relief for 1.1 million student loan borrowers whose institutions either took advantage of them or closed abruptly. This relief includes borrowers from former institutions like Corinthian Colleges and DeVry University.
