Biden administration forgives $37 million in student debt for defrauded borrowers

The Biden administration announced Wednesday 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 Department 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 multiyear 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 Department said. “One senior vice president at Phoenix described one…