Topline
President Joe Biden announced Wednesday he was canceling $37 million in student debt for borrowers from the University of Phoenix, saying they were “deceived” by the school—marking the administration’s latest move to make good on Biden’s priority of forgiving student loans.
A sign marks the location of the University of Phoenix Chicago Campus on July 30, 2015 in … [+]
Key Facts
The borrowers whose loans are being forgiven “were cheated into believing” that attending the University of Phoenix would give them “promising career prospects” at Fortune 500 companies, Biden said in a statement, but those opportunities didn’t exist.
The University of Phoenix is at least the third private university Biden has forgiven loans from—joining Ashford College in San Diego and CollegeAmerica in Colorado —for defrauding students.
The University of Phoenix—a for-profit institution that markets itself as an “online college for working adults”—falsely claimed it worked with companies including Microsoft, Twitter, Adobe, and Yahoo to foster job opportunities for students, according to the Federal Trade Commission.
So far, Biden’s administration has forgiven $117 billion in debt for more than 3.4 million borrowers, despite his first loan forgiveness plan being struck down by the Supreme Court in June.
Chief Critic
In a statement to Forbes, a University of Phoenix spokesperson said they “respectfully, but adamantly disagree” with the Department of Education’s allegations against them related to the FTC settlement. “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,” the spokesperson said.
Key Background
Biden made reducing student debt one of his primary campaign points during the 2020 election, but he hasn’t made it happen to the level many hoped. The Supreme Court ruled the administration overstepped its power with Biden’s first broad forgiveness program that would have forgiven about $400 billion in federal student loans—up to $20,000 for borrowers who received Pell grants and $10,000 for those who didn’t, provided they met income requirements. At the time the Supreme Court struck it, 16 million people had already been approved for forgiveness and the White House estimated about 40 million people would have been helped in total. The $117 billion he has forgiven so far has been for people who work in public service, were allegedly defrauded by their colleges or never saw relief that was supposed to accompany previous income-driven repayment plans. He successfully created the SAVE repayment program, which calculates loan payments using a borrower’s income and family size rather than their loan balance, and will forgive some remaining balances sooner than previous income-based repayment plans.
Tangent
The news of debt forgiveness for former University of Phoenix students comes just days before student loan payments are set to begin again after a years-long pause. In March 2020, payments on federal student loans were paused until September of that year, and the pause continued to be extended throughout the Covid-19 pandemic until October 1 of this year, when payments will resume. Interest on the loans—which was also paused for most of the pandemic—resumed on September 1.
Further Reading
Source: https://www.forbes.com/sites/mollybohannon/2023/09/20/biden-cancels-37-million-in-student-debt-for-borrowers-misled-by-university-of-phoenix/