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Education Department Cancels $1.5 Billion in Loans for Former Westwood College Students

By Maria Carrasco, NASFAA Staff Reporter

The Department of Education (ED) announced on Tuesday that it will cancel $1.5 billion in outstanding student loans for borrowers who attended Westwood College, a private for-profit college that shuttered in 2016. 

The debt relief will impact 79,000 borrowers who attended Westwood College, including its online program, between Jan. 1, 2002, and Nov. 17, 2015, when it stopped enrolling new borrowers. Relief will be granted without any additional actions by the borrowers, ED stated in a press release. 

According to ED, it analyzed evidence related to Westwood College and found that the college widely misrepresented how its credentials would benefit students’ career prospects and earning potential. Specifically, the college promised prospective students that they would be employed in their field within six months after graduation and that a Westwood degree would make them “employable for the rest of [their lives].” 

Additionally, Westwood inflated the salary outcomes of its graduates and misrepresented national earnings data of college graduates as if they were data for Westwood graduates, according to ED. 

“Westwood College’s exploitation of students and abuse of federal financial aid place it in the same circle of infamy occupied by Corinthian Colleges and ITT Technical Institute,” Under Secretary James Kvaal said in a statement. “Westwood operated on a culture of false promises, lies, and manipulation in order to profit off student debt that burdened borrowers long after Westwood closed. The Biden-Harris Administration will continue ramping up oversight and accountability to protect students and taxpayers from abuse and ensure that executives who commit such harm never work at institutions that receive federal financial aid again.”

Attorneys general from Colorado and Illinois provided evidence to ED, such as sworn statements from former students and employees, admissions call recordings, multimedia advertising, and Westwood’s internal communications, policies, and trainings. 

“Strong partnerships between the Department and state attorneys general enable us to uncover the actions of dishonest institutions, like Westwood College,” said Federal Student Aid Chief Operating Officer Richard Cordray in a statement. “Thanks to the valuable assistance of Attorneys General Phil Weiser of Colorado and Kwame Raoul of Illinois, we are delivering loan relief to all Westwood students who put their trust in an institution that decided to take advantage of them.” 

The announcement comes as President Joe Biden announced last week that he is canceling $10,000 in student loan debt for borrowers making less than $125,000, or households earning less than $250,000. The amount is higher for Pell Grant recipients, who will receive $20,000 in relief. 

Earlier this month, ED announced it canceled $3.9 billion worth of federal student loans owed by 208,000 former students of ITT Technical Institute, a for-profit college chain that shut down in September 2016. ED also announced it will propose future rules to hold career programs “accountable for leaving their graduates with mountains of unaffordable debt and poor job prospects,” likely referring to its proposed gainful employment regulations, which have been delayed to the spring of 2023, meaning that the earliest the regulations could take effect will be after July 1, 2024. ED added that in the coming months it will publish a list of “worst actors” to “hold accountable institutions that have contributed to the student debt crisis.”

 

Publication Date: 8/31/2022


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