Education Department to Forgive $415 Million in Student Loans, Citing Misleading Job Placement Rates

A graduating student at the University of California San Diego in San Diego, Calif., on June 17, 2017. (Mike Blake/Reuters)

DeVry University, ITT Technical Institute, and Minnesota School of Business/Globe University misled thousands of students, the Education Department said on Wednesday as it announced it will nullify $415 million in student debt.

The agency said that it intends to force the private for-profit DeVry University to cover the cost of the $71.7 million in loan discharges for some 1,800 borrowers who say they were defrauded by the university.

The school “made widespread substantial misrepresentations about its job placement rates” from 2008 to 2015 in order to get new students to enroll, the department concluded. 

The university repeatedly misled prospective students across the country with claims that 90 percent of its graduates who actively seek employment obtained jobs in their field of study within six months of graduation, the department found.

DeVry’s actual job placement rate was around 58 percent, the agency said, noting that senior DeVry officials were, for years, aware of the problem with the 90 percent statistic, partly due to concerns about its accuracy raised by alumni.

“Students count on their colleges to be truthful,” Education Secretary Miguel Cardona said in a statement. “Unfortunately, today’s findings show too many instances in which students were misled into loans at institutions or programs that could not deliver what they’d promised.”

The department said it anticipates that the number of approved claims related to DeVry will increase as it continues reviewing pending applications. 

Similar allegations from the Federal Trade Commission led to a $100 million settlement with DeVry in 2016. The Epoch Times has reached out to DeVry for comment.

Some $344 million in loans for former students of the nursing program at ITT Tech, Westwood College, Corinthian Colleges, and Marinello Schools of Beauty will also be erased over misleading claims, the department said.

It marks another step in the administration’s work to clear a backlog of claims in the borrower defense program, which forgives debt for students who found to have been defrauded by their colleges.

The program has been used to cancel $2 billion in debt for more than 107,000 borrowers, but until now, it has only provided relief to students after their colleges shut down—leaving taxpayers to cover the loan discharges. But in coming weeks, the education department said it will take action to hold DeVry financially responsible.

“The Department remains committed to giving borrowers discharges when the evidence shows their college violated the law and standards,” added Cardona. 

“While it is critical to get students relief, we also want to deter wrongdoing and to protect taxpayers,” James Kvaal, department undersecretary, said during a media call.

The Associated Press contributed to this report.