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Biden Administration to Cancel $130 Million in Student Debt for CollegeAmerica Students

President Joe Biden announced on Tuesday that he will forgive $130 million in student debt for 7,400 borrowers who attended CollegeAmerica in Colorado. CollegeAmerica was a for-profit college that closed down in 2020 after misleading students about their career prospects and loans.

The debt forgiveness will apply to students who were enrolled in the Colorado-based CollegeAmerica locations between January 1, 2006, and July 1, 2020. The U.S. Department of Education stated that the debt will be automatically forgiven. CollegeAmerica’s Colorado locations stopped enrolling new students in 2019 and closed by September 2020.

CollegeAmerica marketed itself as a college for working adults looking to earn degrees, but it faced criticism from education experts and state officials. In 2018, it was placed on probation by the Accrediting Commission of Career Schools and Colleges (ACCSC) due to concerns about student success.

The Education Department’s decision to forgive the debt came after CollegeAmerica’s parent company, the Center for Excellence in Higher Education, was found to have misrepresented the salaries, employment rates, and loan terms of its graduates. This information was provided by Colorado Attorney General Phil Weiser, who accused the college of enticing students into expensive programs with false promises of high-paying jobs.

President Biden stated that CollegeAmerica borrowers were deceived, taken advantage of, and burdened with significant debt. This debt relief follows the Supreme Court’s rejection of the Biden administration’s broader student loan forgiveness plan, which aimed to cancel up to $20,000 in debt for 40 million borrowers. Loan payments are set to resume in October after a three-year pause.

With this latest announcement, the White House has approved $14.7 billion in debt relief for 1.1 million student loan borrowers who attended colleges that engaged in deceptive practices or abruptly closed. This includes students from CollegeAmerica, according to President Biden.

(Source: financehubusa)

Written by Sanvi Bangalore, a business reporting intern for CBS MoneyWatch.

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