In a significant move aimed at providing relief to affected students, the Department of Education revealed on Wednesday its decision to discharge close to $37 million in student loans for more than 1,200 former attendees of the University of Phoenix. The discharge pertains to borrowers who were enrolled at the institution between September 21, 2012, and December 31, 2014, and have initiated the process of applying for a borrower’s defense loan discharge. This legal recourse allows students to take action against a school involved in misconduct regarding loans or educational services.
Affected borrowers will receive notifications from the Department of Education via email by early October, requiring no further action on their part. Any prior payments made to the department regarding associated federal student loans will be promptly refunded. However, students who attended the University of Phoenix but did not apply for a borrower’s defense discharge must complete the application process on the Federal Student Aid website.
This decision by the Department of Education stems from its thorough examination of evidence gathered by the Federal Trade Commission (FTC) during a 2019 investigation into the University of Phoenix, which culminated in a $191 million settlement. “The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll,” stated Richard Cordray, Chief Operating Officer at Federal Student Aid. “Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees. Today’s announcement builds on the FTC’s work to provide relief to those affected by Phoenix’s misconduct and delivers on the Biden-Harris administration’s mission to support student loan borrowers.”
Since Wednesday’s announcement, the Biden administration has now discharged upwards of $117 billion, including $14.8 billion for 1.1 million borrowers who faced exploitation or abrupt closures of their respective colleges. Through initiatives such as the “closed school loan discharge” and “borrower loan defense discharge” programs, students can seek the discharge of their student debt if their school abruptly closed during their enrollment or if they were misled in any way.
The Department of Education’s investigation revealed that the University of Phoenix engaged in deceptive practices through a nationwide advertising campaign. The campaign falsely claimed partnerships with thousands of corporations, including Fortune 500 companies, promising students benefits such as hiring preferences. In actuality, these corporate affiliations merely permitted Phoenix to showcase their logos in a career database portal, with all job listings accessible to the general public and not exclusive to Phoenix students. An unnamed senior vice president at Phoenix described one of the ads as “smoke and mirrors.” Despite the misleading nature of these claims, Phoenix persisted in advertising these purported connections until December of 2014.
In light of these developments, the Department of Education intends to seek restitution for the costs associated with the borrower’s defense discharge and the repayment of liabilities stemming from these approved claims at a later date from the University of Phoenix. Borrowers who believe they were defrauded are encouraged to submit applications for a borrower’s defense discharge on the Federal Student Aid website.
For students who once placed their trust in the University of Phoenix, inadvertently incurring debt and obtaining degrees of limited utility, the discharge of nearly $37 million in student loans offers a glimmer of hope amidst their challenging financial circumstances.
Source: Yahoo Finance
