Former Deputy Assistant Treasury Secretary Christine McDaniel discusses the consequences of Biden’s student loan handout despite ‘good intentions.’
The Biden administration announced Tuesday that it is erasing $1.5 billion in federal student loan debt for the 79,000 borrowers who attended the now-defunct Westwood College after officials discovered the school exaggerated the job prospects of its graduates.
Any federal student loans used to attend the for-profit school over a 13-year stretch will be canceled, the Education Department says, with the financial decision coming just days after President Biden unveiled a plan to forgive $10,000 in federal student debt for all borrowers with incomes less than $125,000 a year or $250,000 per household.
The Westwood College cancellation applies to all students who attended the chain from Jan. 1, 2002, through Nov. 17, 2015, when the college stopped enrolling new students before its 2016 closure. Students will not need to apply for the relief.
Before its closure, Westwood operated 15 campuses in California, Colorado, Georgia, Illinois and Virginia, along with online programs.
Pedestrians pass by a Westwood College building in Torrance, Calif., Aug. 14, 2009. (AP/Nick Ut/File / AP Images)
With help from attorneys general in Colorado and Illinois, federal officials found that the college routinely misled prospective students about their chances of getting good jobs after graduating.
In its marketing materials, the chain advertised employment rates and salary outcomes that were "grossly inflated," the Education Department found. It also promised to help graduates pay their bills if they couldn’t find jobs within six months after graduating — a pledge officials say wasn’t kept.
President Biden speaks about student loan debt forgiveness in the Roosevelt Room of the White House on Aug. 24 in Washington. (AP/Evan Vucci / AP Images)
In Illinois, the chain's criminal justice programs told students they could expect law enforcement jobs in agencies including the Illinois State Police, but Westwood never had the accreditation needed to meet employment requirements for the state, authorities found.
"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," said James Kvaal, under secretary of education.
Kvaal said the administration is ramping up efforts to protect students and to "ensure that executives who commit such harm never work at institutions that receive federal financial aid again."
A group of students and civil rights organizations sued the Education Department in May demanding debt cancellation for Westwood students in Illinois based on findings of fraud there. It followed a settlement between the college and Illinois that erased institutional loans but not federal debt.
The Associated Press contributed to this report.