The Biden administration announced on Wednesday that it would cancel nearly $37 million in student debt for more than 1,200 students who attended the University of Phoenix.
The relief will go to many borrowers who applied for borrower defense discharges between Sept. 21, 2012 and Dec. 31, 2014, according to the U.S. Department of Education. The borrower defense program allows borrowers who can prove they’ve been misled or defrauded by their schools to get their federal student loans voided.
The University of Phoenix’s national ad campaigns misled students by making them believe their job prospects would be improved by the school’s partnerships with thousands of corporations, including Fortune 500 companies, the Education Dept. said.
“The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll,” said Richard Cordray, the federal student aid chief operating officer.
“Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees,” he said.
The University of Phoenix did not immediately respond to a request for comment.
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The Federal Trade Commission also provided evidence from its multi-year investigation into the University of Phoenix that resulted in a $191 million settlement in 2019. The FTC had obtained internal emails, as well as advertisement materials and recorded phone calls with prospective Phoenix students.
“Phoenix management was aware that the corporate relationships the school claimed to have did not exist,” the Education Dept. said. “One senior vice president at Phoenix described one of the advertisements in question as ‘smoke & mirrors.'”
Impacted borrowers will be notified in early October of the relief, and should see any remaining loan balances canceled. Payments made on these loans will be refunded.
The borrowing rates at the University of Phoenix are among the highest in the country. Its students took out nearly $484 million in the 2022-2023 academic year, according to higher education expert Mark Kantrowitz.
So far, the Biden administration has canceled more than $117 billion in student debt for 3.4 million borrowers, through fixes to certain repayment plans and the Public Service Loan Forgiveness program.
President Joe Biden’s plan to forgive up to $20,000 in student debt for tens of millions of Americans was blocked by the Supreme Court in June. Biden said he was pursuing another path to cancel people’s education debt, though experts say the next rendition is likely to have a narrower reach.
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