Aug 2, 2023
President Joe Biden announced July 25 that he was canceling $130 million in federal debt for over 7,000 students who attended CollegeAmerica in Colorado.
“These borrowers were lied to, ripped off and saddled with mountains of debt,” Biden said in a statement.
The Department of Education (ED) says it found that CollegeAmerica’s parent company, the Center for Excellence in Higher Education (CEHE), misled borrowers with false advertising and claims about the school’s graduates.
Who is getting forgiveness?
Biden’s student relief decision covers a group of 7,400 students who enrolled at three Colorado-based locations of CollegeAmerica between Jan. 1, 2006, and July 1, 2020.
The ED says it will begin notifying borrowers in August if they are approved for debt cancellation. Those affected will automatically have their federal loans discharged and won’t have to submit an application.
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What happened?
CollegeAmerica — a now-defunct private institution — shut down in 2020 after a multi-year investigation and lawsuit brought by the state of Colorado against CEHE and its leadership.
The DE says an independent review of the state’s evidence found CEHE misrepresented graduate earnings and job placement rates, as well as some academic program offerings. The DE also says, from 2007 through 2017, CEHE marketed its private loan offering, EduPlan, as “affordable” even though some years as many as 70% of borrowers who were enrolled in the Colorado campuses defaulted on these loans.
Biden debt relief path
The Biden administration says it has thus far approved $14.7 billion in relief for 1.1 million borrowers “whose colleges took advantage of them or closed abruptly.”
And the president’s pulling out more tools to provide student aid, such as the new Saving on a Valuable Education (SAVE) plan and imposing a 12-month “on ramp” as student loan repayments are set to resume in October.
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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
