The Biden administration canceled another $72 million in student loans this week, saying thousands of students were “cheated” by one California school.
About 2,300 student borrowers who attended Ashford University, an online for-profit school based in San Diego that has since been acquired by the University of Arizona, will have their debt wiped away, the Department of Education announced in a statement on Wednesday.
This latest batch of debt relief comes after the Supreme Court in June struck down President Biden’s massive $430 billion student debt relief plan that would have forgiven 40 million people’s loans.
This week’s decision brings the Biden administration’s total student debt forgiven up to $116 billion for more than 3.4 million people, the administration said.
Wednesday’s $72 million in loan forgiveness is the result of the Department of Education’s review of a 2017 lawsuit the California Department of Justice brought against Ashford University. California claimed the school had misled students by lying about tuition costs and employment potential while also using aggressive recruiting methods.
Ashford students had filed borrower defense claims alleging they were defrauded by their school. This type of claim can result in loan forgiveness if approved.
A judge ruled at the time that Ashford University made 1.2 million misrepresentations to students between 2009 and 2020 and imposed a civil penalty of $22.3 million. The school is currently appealing the ruling.
The court’s decision stated that the school “created a high-pressure admissions department whose north star was enrollment numbers” and that “admissions counselors would cross a ‘gray line’ ethically or ‘do things they wouldn’t normally do’ to boost numbers to keep their jobs.”
“As the California Department of Justice proved in court, Ashford relied extensively on high-pressure and deceptive recruiting tactics to lure students,” Under Secretary of Education James Kvaal said in Wednesday’s statement. “Today we are protecting the students who were cheated by Ashford, and we will also hold the perpetrators accountable, protect taxpayers, and deter future wrongdoing.”
“What Ashford University did to its students was unconscionable and illegal,” California Attorney General Rob Bonta said. “I want to thank the Biden-Harris Administration for changing the lives of thousands of former Ashford students today. They have lived a nightmare for too long.”
Since the Supreme Court’s decision forcing Biden to scrap his $430 billion student loan forgiveness plan, the president has looked for other ways to get borrowers relief.
After the court’s decision, Biden said he would “stop at nothing to find other ways to deliver relief to hard-working middle-class families.”
In an email to student loan holders, the administration even said the Supreme Court “got it wrong” on student debt.
Last month, the administration outlined several debt relief actions it said it would take “immediately” instead of Biden’s nixed plan.
One of the actions is the Saving on a Valuable Education (SAVE) plan, which will cut monthly payments to $0 for millions of low-income borrowers.
Another move is ensuring borrowers are protected from the “worst consequences” of late or partial payments, such as a hit to their credit score when the student loan payment pause ends this fall.