Department of Education Announces Cancellation for 16,000 Defrauded Borrowers

The U.S. Department of Education announced Wednesday that it will cancel the federal student loans of 16,000 borrowers who were defrauded by DeVry University, along with a few for-profit colleges that are no longer open for business.

It'll be the first time the federal agency has canceled student loan debt for borrowers who attended a school that's still open and eligible for federal financial aid.

Defrauded Students from Multiple For-Profit Schools to Have Loans Discharged

The borrower defense to repayment program is a federal program that provides protection for student loan borrowers who have been misled by their school or whose school violated certain state laws.

On Wednesday, the U.S. Department of Education announced that it would cancel $415 million in federal student loans for 16,000 borrowers who submitted claims under the borrower defense to repayment program.

Of that amount, $71.7 million will be discharged for 1,800 former students of DeVry University, which made misrepresentations to encourage students to enroll.

Typically, when for-profit colleges fail, it's up to the Education Department to foot the bill for loan cancellation. In this case, however, the federal agency plans to recoup its costs from DeVry, which remains open. Here's how the rest of the announced discharges break down:

• Westwood College: The agency will cancel $53.1 million in loans for roughly 1,600 borrowers. The school made substantial misrepresentations about students' likelihood of finding a job and their salary potential following graduation, including making a pledge to help students find a job within six months or help pay bills.
• ITT Technical Institute: The Education Department will discharge $3.1 million in debt for about 130 students who were enrolled in ITT's nursing program. The school falsely told students that it would obtain necessary accreditation that would help them get jobs after graduation.
• Minnesota School of Business/Globe University: The department approved $3 million in discharges for 270 former students who were enrolled in the criminal justice program at either school. The for-profit education network falsely told students that the programs had the accreditation necessary for them to obtain a job as a police officer or parole or probation officer. In January, the federal agency announced approval for the discharge of $23 million in loans for 921 students in the programs.
• Other schools: Since the federal agency has announced discharges under the program for federal loan borrowers defrauded by other schools, it has received additional claims. The latest announcement includes $284.5 million in cancellations for former students of Corinthian Colleges and other for-profit universities.

If you believe that you qualify for student loan cancellation because you've been defrauded by your school, you can submit an application through the Federal Student Aid Office website.