The Biden administration is pulling out all the stops to appease young voters ahead of a pivotal 2024 election.
The U.S. Department of Education (DOE) has given the green light to a student loan forgiveness initiative amounting to $72 million, intended to alleviate the financial burden of students who fell victim to fraudulent practices by an online educational institution.
This loan forgiveness program targets more than 2,300 students who were enrolled at Ashford University, a former online for-profit school situated in San Diego, California.
According to a press release issued on August 30, the initiative operates under the long-standing “borrower defense” student aid scheme. This program enables individuals who were deceived by for-profit colleges to seek forgiveness for their student loans.
The decision to implement this loan forgiveness followed a thorough assessment by the DOE, which analyzed evidence presented by the California Department of Justice (DOJ) during its successful legal action against Ashford and its parent company, Zovio, in 2017.
The lawsuit leveled allegations against Ashford, asserting that the institution employed deceptive tactics to misguide students. A court ruling on March 3, 2022, ruled in favor of the California DOJ, finding Ashford responsible for making over 1.2 million misleading statements across the country to prospective students.
After carefully examining the case, the DOE sanctioned loan forgiveness for students who attended Ashford and sought relief through the borrower defense program. The relief applies to borrowers who enrolled at Ashford between March 1, 2009, and April 30, 2020.
“As the California Department of Justice proved in court, Ashford relied extensively on high-pressure and deceptive recruiting tactics to lure students,” said U.S. Under Secretary of Education James Kvaal.
“Today we are protecting the students who were cheated by Ashford, and we will also hold the perpetrators accountable, protect taxpayers, and deter future wrongdoing.”
The announcement of the $72 million forgiveness initiative has surfaced shortly after a group of Democrats penned a letter to President Biden, urging him to continuously explore avenues to exercise his authority in reducing student debt. This plea comes in the wake of the Supreme Court’s recent ruling that blocked the government from enacting an expansive scheme for forgiving student debt.
Merely a few weeks prior, on June 30, the Supreme Court (SCOTUS) invalidated the Biden administration’s proposal to cancel up to $20,000 in loan principal for the 40 million student borrowers.
The Congressional Budget Office (CBO) had projected the cost of this forgiveness plan to be around $400 billion. However, estimations from the Wharton School surpassed this figure, indicating a potential cost exceeding $1 trillion.