President Biden announced on Wednesday that he is canceling $37 million in student debt for over 1,000 borrowers who attended the University of Phoenix, an online college. Mr. Biden stated that these borrowers were deceived into believing that their enrollment at the university would lead to promising careers at Fortune 500 companies. However, those opportunities never materialized.
Mr. Biden emphasized that his administration will not tolerate colleges taking advantage of hardworking students and borrowers. The Department of Education conducted a review of the University of Phoenix and found a national campaign that falsely advertised partnerships with Fortune 500 companies, but ultimately provided no benefits to students.
The forgiveness of debt applies to students who enrolled between September 21, 2012, and December 31, 2014. This action follows a Federal Trade Commission (FTC) investigation into the University of Phoenix, which resulted in a $191 million settlement in 2019.
Richard Cordray, the Chief Operating Officer of Federal Student Aid, stated that the University of Phoenix deceived students with false advertisements, leading them to accumulate large amounts of debt and obtain useless degrees.
In response, the University of Phoenix disagreed with the allegations from the Department of Education and the FTC, stating that these claims were never tested in court. The university recognizes student borrower complaints but will challenge frivolous and suspicious claims.
President Biden has made student debt relief a prominent issue, believing that college costs have become unmanageable for many Americans. Critics argue that he is pandering to young voters and expecting blue-collar workers to subsidize the education of college graduates through their tax dollars.
Mr. Biden also highlighted that he has approved over $117 billion in debt relief for more than 3.4 million borrowers, including $14 billion for over 1 million borrowers who were misled by their colleges or experienced sudden closures.
While a plan to eliminate significant amounts of student loan debt faced challenges in Congress and the courts, Mr. Biden recently introduced the SAVE income-driven plan. This plan calculates loan payments based on a borrower’s income and family size and forgives any remaining balances after a certain number of years.