ED Discharges $130 Million in Student Loan Debt for Borrowers Who Attended CollegeAmerica in Colorado
By Hugh T. Ferguson, NASFAA Senior Staff Reporter
The Department of Education (ED) on Tuesday announced it will cancel the federal student loans of 7,400 borrowers who enrolled at CollegeAmerica’s Colorado-based locations between Jan. 1, 2006 to July 1, 2020.
The discharge would total $130 million and, per ED, accounts for “pervasive and widespread misrepresentations” made by CollegeAmerica’s parent company, the Center for Excellence in Higher Education (CEHE), concerning the salaries and employment rates of graduates, programs offered by the institution, and the terms of available private loans.
The findings date back to a 2012 investigation spearheaded by the Colorado Attorney General’s office which resulted in a judgment in favor of the state in 2020. ED utilized an independent review of the state’s evidence and verified information through additional borrower defense applications.
Among the findings, ED determined that CEHE manipulated data on graduates’ average earnings, inflated job placement rates from 40% to 70%, advertised their private loan product as “affordable” when 70% of borrowers were in default, and falsely advertised programs that were not available to students.
In 2019, Colorado CollegeAmerica campuses stopped enrolling students and subsequently closed in September of 2020. All remaining CEHE campuses closed in August 2021.
According to ED, the loan cancellation will be automatically applied regardless of whether a borrower has filed a borrower defense to repayment claim.
ED will begin to notify borrowers about their approved discharges in August.
Borrowers will see any remaining balances zeroed out, the accounts will be removed from their credit reports, and any payments made to the department will be refunded.
“This announcement means a clean slate for thousands of students hurt by CollegeAmerica’s widespread misconduct,” said Federal Student Aid (FSA) Chief Operating Officer Richard Cordray. “We will continue to work to deliver targeted student loan relief to borrowers whose schools take advantage of them.”
The department also encouraged other states to utilize updated borrower defense regulations, which went into effect on July 1, that enable states to submit group applications with evidence of potential wrongdoing through a specific process.
In total, ED noted that the administration has now approved $116 billion in student loan debt relief to over 3.4 million borrowers.
“While my predecessor looked the other way when colleges defrauded students and borrowers – I promised to take this on directly, and provide borrowers with the relief they need and deserve,” President Joe Biden said in remarks following the announcement. “As long as I am president, we will never stop fighting to deliver relief to borrowers, hold bad actors accountable, and bring the promise of college to more Americans.”
Publication Date: 7/26/2023
Ben R | 7/26/2023 10:19:17 AM
So let that be a lesson: If you are a closed school with no assets and no management left, then you will be held accountable.
You must be logged in to comment on this page.