Biden administration cancels $130M in debt for students who it says were ‘ripped off’

A group of around 7,000 borrowers who attended CollegeAmerica will have any remaining student debt erased, President Joe Biden announced this week.

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More than 7,400 students who enrolled at Colorado-based locations of CollegeAmerica between Jan. 1, 2006, and July 1, 2020, are eligible for the debt relief.

“These borrowers were lied to, ripped off and saddled with mountains of debt,” President Joe Biden said in a statement.

The for-profit college was run by an organization known as Center for Excellence in Higher Education (CEHE). The college found to have used false marketing and predatory loan practices, the Department of Education said in a statement.

“I applaud the Department of Education for providing much-deserved relief to the many Coloradans who were mistreated by CollegeAmerica,” Colorado Attorney General Weiser said.

“CollegeAmerica knowingly took advantage of students by luring them into high-priced, low-quality programs with promises of high-earning potential and job placement that it knew were not attainable. Protecting borrowers from predatory lending and helping Coloradans navigate through student loan burdens will continue to be a priority for our office.”

The Biden administration announced it will spend $130 million to pay off the debt. Any loan payments already made to the Education Department will also be refunded.

The debt relief comes as part of a DOE agreement to a $6 billion settlement forgiving the loans of hundreds of thousands of people who were defrauded by several for-profit or otherwise “predatory” schools, according to the DOE.

Last month, the U.S. Supreme Court struck down Biden’s plan to erase the student loan debt of millions of Americans who took out federally funded loans.

After the ruling, Biden announced that his administration would pursue other avenues of debt relief for those who took out student loans.