President Joe Biden announced Tuesday that he is canceling $130 million in outstanding student loan debt for students at a defunct Colorado college.
Biden and officials with the Department of Education announced in a series of statements that they would be canceling the debt for 7,400 student borrowers who were "lied to, ripped off, and saddled with mountains of debt" by CollegeAmerica, a Utah-based non-profit led by the Center for Excellence in Higher Education (CEHE) that had been sued by the federal government for encouraging prospective students to apply for federal financial aid to finance degrees with dubious credibility.
While all of its campuses are no longer operational, CollegeAmerica's Colorado campus was shuttered in September 2020 after an investigation by the state attorney general discovered that the organization had misrepresented the salaries and employment rates of its graduates, resulting in a $3 million fine and the loss of accreditation at each of its campuses.
CEHE appealed the decision but lost this year in the Colorado Supreme Court, opening the door for Biden to eliminate the debts its students had accrued.
"While my predecessor looked the other way when colleges defrauded students and borrowers—I promised to take this on directly, and provide borrowers with the relief they need and deserve," Biden said in a statement announcing the decision.
"Already under my Administration, we've approved $14.7 billion in relief for 1.1 million borrowers whose colleges took advantage of them or closed abruptly—like those students who attended CollegeAmerica in Colorado. And in total, we have approved $116 billion in debt relief for over 3.4 million Americans."
Today, we're canceling $130 million in debt for 7,400 borrowers who were ripped off at CollegeAmerica in Colorado.
— President Biden (@POTUS) July 25, 2023
As long as I'm president, I'll never stop fighting to deliver relief to borrowers, hold bad actors accountable, and bring the promise of college to more Americans. https://t.co/lzNtUNJSBy
Newsweek reached out to CEHE founder Carl Barney via email for comment.
CollegeAmerica had long-grappled with the federal government, including a failed effort in the mid-2010s to try to achieve non-profit status that was later denied by the Department of Education under President Barack Obama amid allegations that the college was misrepresenting the credibility of its degree programs. The Trump administration reversed course several years later.
The woes continued after the school's closure as the Biden administration took over, with the administration sharply reversing course on the Trump administration's approach to for-profit institutions like CollegeAmerica, Corinthian Colleges and Trump University.
In 2021, CEHE accused the Department of Education of slow-walking a $29 million federal reimbursement request for federal student aid amid allegations from the department that the college operator wasn't giving students sufficient information on how to transfer to other schools or discharge their loans after the closure of their campuses. The organization went on to sue the Department of Education for $500 million in damages, accusing it of forcing the campuses to close.
The decision came mere weeks after the U.S. Supreme Court ruled that the Biden administration did not have the authority to bypass Congress to forgive billions in federally backed student loan debt.
Biden later pledged to pursue a new avenue to forgiving those debts using the Higher Education Act of 1965, saying in remarks at the White House that the approach was "going to take longer, but, in my view, it's the best path that remains to providing for as many borrowers as possible with debt relief."
