Biden Administration Cancels $130 Million of Student Debt

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The Biden administration is forgiving $130 million in student debt for 7,400 borrowers who attended the now-defunct CollegeAmerica, a Colorado-based private school whose parent company allegedly misrepresented graduates’ salary, employment rates and other information.

The debt cancellation specifically applies to borrowers who attended CollegeAmerica’s Colorado-based locations between January 1, 2006 and July 1, 2020. The school is permanently closed but the Center for Excellence in Higher Education (CEHE), its parent company, remains in operation, according to its website.

CEHE did not respond to Kiplinger’s request for comment.

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CollegeAmerica abruptly shut down in 2021 after losing its accreditation. Starting in 2012, the Colorado attorney general’s (AG) office investigated CEHE and its state leadership, which culminated in a 2017 bench trial and a judgement in the state’s favor.

In August 2020, a Denver District Court judge found that CollegeAmerica’s marketing and admissions operations violated state consumer protection and consumer lending laws, said current Colorado AG Phil Weiser in a statement. The AG said he asked the Department of Education (DOE) in 2022, while the case was on appeal, to cancel the loans for students who qualify and to return money former students paid to the DOE because of CEHE’s misrepresentations about the school.

The DOE said its own investigation revealed that CEHE misrepresented salaries and employment rates of its graduates, the programs it offered as well as the terms of a private loan product it offered.

“From Day One of my administration, I promised to rebuild the middle class and to fight for hardworking American families. Today, we are taking another significant step to deliver on that promise by cancelling $130 million in debt for 7,400 student borrowers who attended CollegeAmerica in Colorado,” President Joe Biden said in a statement. “These borrowers were lied to, ripped off, and saddled with mountains of debt.”

The U.S. Supreme Court recently struck down the White House’s plan to forgive up to $20,000 of student debt per borrower for more than 40 million Americans. Student loan repayments are scheduled to resume in October after a three-year pause beginning in March 2020 due to the Covid-19 pandemic.

The Biden Administration has now approved $14.7 billion in debt relief for 1.1 million student loan borrowers “whose colleges took advantage of them or closed abruptly,” including Corinthian Colleges and DeVry University.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.