Education Department cancels $1.5 billion in student debt for 79,000 borrowers subjected to ‘false promises’ by Westwood College

The U.S. Department of Education on Tuesday announced it will 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 school stopped enrollment ahead of its 2016 closure. 

The forgiveness will happen automatically, regardless of whether former students have applied for a borrower defense discharge, the Education Department said.  

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“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,” said Under Secretary James Kvaal in the announcement. “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 department found the school routinely misled prospective students by “grossly misrepresenting” the value 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 help attendees with post-graduation bills if they weren’t hired within six months, the findings show.

Higher education expert Mark Kantrowitz told CNBC the latest discharge is “a continuation of the work that the Department of Education has done, using existing student loan forgiveness and discharge programs to address 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, according to the release.

“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,” Kvaal added.