The Biden administration is canceling $37 million in federal student loan debt for over 1,200 University of Phoenix borrowers because the school misled them about job prospects. This is a more targeted approach to student debt forgiveness after the Supreme Court blocked a broader program.
In August, the Department of Education canceled $72 million in federal student loan debt for over 2,300 borrowers who attended Ashford University due to similar concerns about deceptive practices.
Since 2021, the Biden administration has canceled over $117 billion of the approximately $1.7 trillion in outstanding federal student loan debt.
Former University of Phoenix students who attended between September 2012 and December 2014 and applied for loan forgiveness under the borrower defense to repayment program are now eligible for debt relief due to allegations of college deception or fraud.
The Department of Education discovered that the University of Phoenix made false claims about partnerships with numerous corporations, including Fortune 500 companies, offering students hiring advantages, building upon an FTC investigation.
In 2019, the University of Phoenix reached a settlement agreement with the FTC regarding similar claims, although the university did not admit to or deny any allegations at that time.
“The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll,” said Federal Student Aid chief operating officer Richard Cordray.
“Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees,” he added.
Earlier this week, The University of Phoenix issued a statement refuting the government’s findings and emphasizing that the school admitted no wrongdoing when settling with the FTC in 2019.
“We respectfully, but adamantly disagree with the U.S. Department of Education’s allegations related to the Dec. 2019 University of Phoenix settlement with the Federal Trade Commission,” it said.
“While the University is not against relief for borrowers who have valid claims, we intend to vigorously challenge each frivolous allegation and suspicious claim through every available legal avenue.”
Eligible borrowers will be notified in early October about the approval of their debt relief applications. Student loan servicers will put their loans in forbearance until the debt is canceled, and these borrowers won’t need to make payments, even after the pandemic-related loan payment freeze ends in October.
Former University of Phoenix students who believe they were affected during those years can apply for student debt relief under the borrower defense program on the Federal Student Aid website.
The Biden administration has simplified the process for federal student loan forgiveness through various existing programs, including expanding eligibility for the Public Service Loan Forgiveness program and initiating a one-time account adjustment for borrowers who have been making payments for at least 20 years.