Biden Administration Forgives $415 Million In Student Debt Defrauded By For-Profit Schools

The Department of Education has forgiven more than $415 million in student debt from borrowers who attended for-profit schools in the latest move by the Biden administration to help this group of 16,000 students.

On Wednesday evening, Education Secretary Miguel Cardona announced that the department would erase the debt for these students because the "evidence shows their [for-profit] college violated the law and standards."

The students in this case attended well-known for-profits like DeVry University, the now-closed ITT Technical Institute and Westwood College.

“Students count on their colleges to be truthful. Unfortunately, today’s findings show too many instances in which students were misled into loans at institutions or programs that could not deliver what they’d promised," said Cardona in a statement.

In its investigation, the Education Department found that between 2008 and 2015, DeVry misled students by claiming that 90% of its graduates who actively seek employment obtained jobs in their field of study within six months of graduation. Instead, only 58% of graduates were able to find job placement after graduation.

A spokesperson for DeVry told CNBC that the school changed its leadership after the allegations emerged, but went on to dismiss the government's claims of purposely misleading students.

“Nonetheless, we do believe that the Department of Education mischaracterizes DeVry’s calculation and disclosure of graduate outcomes in certain advertising, and we do not agree with the conclusions they have reached,” said DeVry spokesperson Donna Shaults.

This action follows other efforts by the Biden administration to assist students who were defrauded by for-profit universities and left with substantial debts without the jobs they thought they would get after graduation. Last March, the administration forgave $1 billion in debt for defrauded students and followed up by erasing another $500 million in July 2021.

The Biden administration has come under sustained pressure from progressives within his Democratic Party, who are pushing for him to use his executive authority to forgive students' federal student debt. Biden has deferred to the Education Department to determine whether he had the legal authority to act, but the president himself has been critical to the point of being dismissive of the idea.