- The U.S. Department of Education said Wednesday it will cancel $415 million in debt from nearly 16,000 defrauded student loan borrowers who attended several for-profit colleges, including one currently operational, DeVry University.
- Wednesday's announcement marks the first time the Education Department is granting a type of debt relief known as borrower defense to defrauded students who attended an institution that remains open and continues to access Title IV federal financial aid.
- Department officials said they would attempt to recoup discharge costs from DeVry. Discharges for former DeVry students total $71.7 million, and officials expect that figure to grow as they approve more relief claims.
The Biden Education Department inherited large numbers of applications from borrowers seeking debt relief under a statute called borrower defense to repayment.
This provision offers loan forgiveness to those whose institutions misled them over key aspects of their programs, like credit transferability or job prospects.
With Wednesday's news, the Biden administration has approved clearing about $2 billion in loan debt for roughly 107,000 students through borrower defense, including about 1,800 former DeVry students.
Often, borrower defense has been invoked by former attendees of for-profit schools. The Trump administration upended this process, with former Education Secretary Betsy DeVos creating a rule that increased borrowers' burden of proof. She also stopped processing relief claims.
DeVos in 2019 was sued by an advocacy organization that demanded she process outstanding debt claims. The case is ongoing under Education Secretary Miguel Cardona.
The Education Department has said it is moving quickly to ease students' debt burdens by reworking the borrower defense regulation and processing outstanding relief claims.
Wednesday's action benefits DeVry students who enrolled from 2008 to 2015, years when the department said the for-profit college was falsely advertising that 90% of its students secured jobs in their fields within six months of graduation. The actual job placement rate was in reality under 60%, the department said.
DeVry already settled for $100 million with the Federal Trade Commission in 2016 over similar allegations of deceptive advertising.
The university "is deeply committed to student success and has oriented our whole organization around helping people compete in a complex and changing labor market," DeVry spokesperson Donna Shaults said in an email. Shaults noted the relief claims predate its current leadership.
"Nonetheless, we do believe that the Department of Education mischaracterizes DeVry's calculation and disclosure of graduate outcomes in certain advertising, and we do not agree with the conclusions they have reached," Shaults said.
Education Department officials told reporters Wednesday they would seek to recoup loan discharge costs from DeVry's current owners. DeVry's previous owner, Adtalem Global Education, sold it in 2018.
Under a 2016 settlement with the department, DeVry needed to post a letter of credit with the agency worth more than $68 million. However, Adtalem said in U.S. Securities and Exchange Commission filings the letter of credit expired during fiscal 2022.
DeVry will be able to continue to access Title IV money, which ensures it can stay open.
Also on Wednesday, the department approved $53 million in claims for 1,600 students who attended the defunct for-profit Westwood College. The department found the institution misled students about salary potential and job possibilities from 2002 through 2015, when the college closed.
It also granted $3 million in loan relief for about 130 borrowers in ITT Technical Institute's nursing program, as well as the same amount for 270 students who attended Globe University and Minnesota School of Business. Both for-profit networks have closed.
Another $284.5 million in discharges will go to more than 11,900 students who attended other institutions.