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Education Dept. cancels $1.5 billion in loans for Westwood College borrowers

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The U.S. Department of Education on Tuesday announced it should cancel all remaining federal student debt for former students of the now-defunct for-profit Westwood College, delivering $1.5 billion in relief to 79,000 borrowers.

The cancellation covers students who attended any location of Westwood College, including online programs, from Jan. 1, 2002 to Nov. 17, 2015, when the varsity stopped enrollment ahead of its 2016 closure. 

The forgiveness will occur mechanically, no matter whether former students have applied for a borrower defense discharge, the Education Department said.  

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“Westwood College’s exploitation of scholars and abuse of federal financial aid place it in the identical circle of infamy occupied by Corinthian Colleges and ITT Technical Institute,” said Under Secretary James Kvaal within the announcement. “Westwood operated on a culture of false guarantees, lies and manipulation to be able to profit off student debt that burdened borrowers long after Westwood closed.”

The department found the varsity routinely misled prospective students by “grossly misrepresenting” the worth of its credentials, including inflated job placement rates and earnings potential.

What’s more, Westwood College provided students with a false “employment pledge,” vowing to assist attendees with post-graduation bills in the event that they weren’t hired inside six months, the findings show.

Higher-education expert Mark Kantrowitz told CNBC the newest discharge is “a continuation of the work that the Department of Education has done, using existing student loan forgiveness and discharge programs to deal with inequities.”

The department has now approved $14.5 billion in student loan cancellation for nearly 1.1 million borrowers whose colleges took advantage of them, based on the discharge.

“The Biden-Harris Administration will proceed ramping up oversight and accountability to guard students and taxpayers from abuse and be sure that executives who commit such harm never work at institutions that receive federal financial aid again,” Kvaal added.

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