Student loan debt: DOE announces more student loan forgiveness

The Department of Education announced Tuesday that $1.5 billion more in student debt will be forgiven.

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The debt cancellation announced by the DOE is not connected to the debt forgiveness plan announced by President Joe Biden last week.

The latest plan is aimed at around 79,000 students who attended Westwood College — a private, for-profit institution that closed in 2016. The loans for those students will be fully canceled.

According to the DOE, “the school engaged in widespread misrepresentations about the value of its credentials for attendees’ and graduates’ employment prospects.”

“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,” Undersecretary James Kvaal said Tuesday.

Westwood “routinely misled prospective students by grossly misrepresenting that its credentials would benefit their career prospects and earning potential,” the department said in a news release.

In addition, the DOE said Westwood assured students they would be employed in their field within six months and falsified what it said was the salaries of its graduates. The school also promised it would pay students’ bills if they could not find a job within six months, the DOE said.

Westwood students will not have to file a borrower defense claim, according to the department — the discharges will happen automatically.

The latest news of debt forgiveness comes weeks after the DOE announced debt forgiveness of $3.9 billion for students who attended ITT Technical Institute and $5.8 billion for students who attended Corinthian Colleges, both for-profit institutions.

Last week, Biden announced that federal loan borrowers would have up to $10,000 of student loan debt forgiven and up to $20,000 in Pell Grant loans forgiven.

“All of this means people can start finally to climb out from under that mountain of debt,” Biden said in remarks from the White House. “To finally think about buying a home or starting a family or starting a business. And by the way, when this happens, the whole economy is better off.”

The plan brought praise from most Democrats and criticism from Republicans.

“Last week, we saw how, with the flick of a pen, President Biden took a giant step forward in addressing the student debt crisis by cancelling significant amounts of student debt for millions of borrowers,” Senate Majority Leader Chuck Schumer said.

The Republican National Committee released a statement calling the program “Biden’s bailout for the wealthy.”

Sen. Ben Sasse, R-Nebraska, said the plan “forces blue-collar workers to subsidize white-collar graduate students. Instead of demanding accountability from an underperforming higher-education sector that pushes so many young Americans into massive debt, the administration’s unilateral plan baptizes a broken system.”

The DOE has announced initial details of a proposed rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers.

This proposed rule, according to a news release from the agency, will make “long-term improvements to existing student loan forgiveness programs and provide greater protections for students and taxpayers against unaffordable debts.”

The Education Department also announced Tuesday it will propose new rules aimed at holding career programs accountable and new actions against institutions that have “contributed to the student debt crisis.”