Biden Administration Removes Over $55M in Loan Debt for Students of 3 For-Profit Colleges

President Joe Biden's administration is removing more than $55 million in loan debt for over 1,800 student borrowers lured in by false claims at three for-profit colleges, the administration announced Friday.

Former students who attended the now-closed schools: Westwood College, the Marinello Schools of Beauty and the Court Reporting Institute will have their loans forgiven as many could not find jobs as a result of the schools' false promises. The move is tied to the Education Department's borrower defense program, where there is a backlog of claims, that erases student debt for those that were defrauded by their schools, the Associated Press reported.

"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 Education Secretary Miguel Cardona in a statement.

Most of the former students receiving loan forgiveness attended Westwood College that shut down its campuses nationwide in 2015. Students were told their college credits would transfer to other schools but the Education Department said that did not occur in most cases, causing students to have to restart their studies.

For more reporting from the Associated Press, see below.

U.S. President Joe Biden
U.S. President Joe Biden's administration is removing over $55 million in student loans for former students who attended three for-profit colleges. In this photo, Biden speaks during an East Room event on troop withdrawal from Afghanistan at the White House July 8, 2021 in Washington, DC. Alex Wong/Getty Images

All three for-profit colleges have been closed for years after facing accusations of fraud and deception in their advertising.

Applications in the Education Department's borrower defense program piled up when the Trump administration stalled the program while it rewrote the rules, leaving a current backlog of more than 100,000 pending claims.

Cardona added that the new round of approvals should "serve as a warning to any institution engaging in similar conduct that this type of misrepresentation is unacceptable."

Westwood College also made false claims about a criminal justice program in Illinois, saying graduates could get jobs as police officers in the Chicago area, the department said. But many police agencies didn't accept credits from Westwood, leaving many graduates to accept minimum wage jobs in other fields.

About 200 of the loan discharges are for the Marinello Schools of Beauty, which closed in 2016 after the federal government cut off its funding. The college had a history of failing to deliver the education it promised, the department said, in some cases leaving students without instructors for months. As a result, some cosmetology students never learned key skills like how to cut hair, and many had difficulty passing state licensing tests.

The department approved 18 claims from the Court Reporting Institute, which had locations in Washington, California and Idaho before shutting down in 2006. The college was found to have lied about the amount of time required to complete its training to become a court reporter. Only about 6 percent of students actually ended up graduating, the department found, and those who did took much longer than the college said it would.

Last month, the Biden administration erased student debt for more than 18,000 borrowers of the ITT Technical Institute, another defunct for-profit college. And in March, it cleared $1 billion in debt for former students of ITT and the Corinthian Colleges chain. In total, the administration has granted claims totaling $1.5 billion for nearly 92,000 borrowers.

The borrower defense program is among several targeted for an overhaul by the Biden administration as it seeks to undo Trump-era policies. Former Education Secretary Betsy DeVos issued new rules meant to scale back loan forgiveness, which she said had become too easy to obtain.

DeVos also implemented a new formula that offered only partial loan relief even if claims were granted. Cardona rescinded that formula in March and said all borrowers granted relief would get their loans erased in full. The department held a hearing on the topic last month as it considers changing the rules.

Education Secretary Miguel Cardona
In this March 17, 2021, file photo, Education Secretary Miguel Cardona speaks during a press briefing at the White House in Washington. Andrew Harnik/AP Photo