Biden Administration Cancels $37 Million in Student Debt

U.S. President Joe Biden speaks about supporting families, care workers, and family caregivers at the Rose Garden of the White House in Washington on April 18, 2023. Madalina Vasiliu/The Epoch Times

The Biden administration has approved a $37 million student loan forgiveness plan to provide relief for students who the Education Department says were “brazenly” deceived by an Arizona-based university.

More than 1,200 borrowers who attended the University of Phoenix will have their student debts canceled after an investigation by the Federal Trade Commission (FTC) that was reviewed by the Department of Education (DOE) found that the school deceived prospective students with false ads about job opportunities in a bid to persuade them to attend.

“Students deceived by the University of Phoenix deserve strong relief, and today’s action is an important step forward,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement.

A spokesman for the University of Phoenix told The Epoch Times via email that the claims were “inaccurate, baseless, or incomplete,” that they were never tested in court, and that the school denies any wrongdoing.

The $37 million payout to borrowers who were affected by the deception brings the total amount of debt cancellation approved by the Biden administration to more than $117 billion. This includes nearly $15 billion in relief for some 1.1 million borrowers whose colleges either closed abruptly or unfairly took advantage of students.

The Biden administration has taken a narrower approach to advance President Joe Biden’s pledge to forgive student loans after the Supreme Court blocked a wide-ranging initiative to cancel up to $20,000 of student debt per student.

President Joe Biden is joined by Education Secretary Miguel Cardona as he announces new actions to protect borrowers after the Supreme Court struck down his student loan forgiveness plan in the Roosevelt Room at the White House on June 30, 2023. Chip Somodevilla/Getty Images

‘Mounds of Debt and Useless Degrees’

The Sept. 20 announcement caps a multiyear investigation led by the FTC into the University of Phoenix and its parent company, Apollo Education Group.

The FTC sued the two in 2019, alleging in its complaint (pdf) that, since at least 2012, the defendants had deceptively advertised the benefits of an education at the university.

Specifically, the FTC alleged that the defendants used television, radio, and internet advertisements that misrepresented the University of Phoenix’s relationships with major companies such as Adobe and Microsoft while falsely claiming that these relationships would provide career or employment opportunities.

The school also made the misleading claim that the University of Phoenix had worked with such firms—which included many Fortune 500 companies—to develop a curriculum, according to the FTC’s complaint.

The FTC’s multiyear investigation into the university was ultimately resolved in 2019, and, as part of a record $191 million action, the school was ordered to pay the FTC $50 million to make payments to former students.

The University of Phoenix was also ordered to cancel $141 million in private student debt that was owed directly to the school.

“The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll,” DOE Federal Student Aid Chief Operating Officer Richard Cordray said in a statement.

“Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees.”

People rally in support of the Biden administration's student debt relief plan in front of the U.S. Supreme Court in Washington on Feb. 28, 2023. Drew Angerer/Getty Images

‘Adamantly Disagree’

A spokesman for the University of Phoenix told The Epoch Times via email that it disagrees with the premise of the FTC’s and the DOE’s claims of deception.

“We respectfully but adamantly disagree with the U.S. Department of Education’s allegations related to the December 2019 University of Phoenix settlement with the Federal Trade Commission (FTC),” the spokesperson said.

The University of Phoenix maintains its innocence, the spokesperson said, noting that it takes student borrower complaints “very seriously.”

The school has provided the DOE with evidence “refuting inaccurate, baseless, or incomplete claims,” the spokesperson said, saying that it isn’t against relief for borrowers with legitimate claims but that the school intends to “vigorously challenge each frivolous allegation and suspicious claim through every available legal avenue.”

The latest action was approved under the “borrower defense” student aid program that has been in place for decades.

Under the program, student loan borrowers who were misled by for-profit colleges are eligible to apply for forgiveness.

In August 2022, the Biden administration unveiled a plan to forgive up to $20,000 in student debt per person for about 40 million borrowers.

The Congressional Budget Office stated that the plan could cost about $400 billion, while the Wharton School estimated that the price tag could exceed $1 trillion.

Then, in a split decision on June 30, the Supreme Court voted 6–3 to strike down President Biden’s controversial debt forgiveness plan.

Sixteen million people had been approved for debt relief and “the money was literally about to go out the door,” according to President Biden.

“And then Republican elected officials and special interests stepped in,” he said, reacting to the ruling.

“They said no, no—literally snatching from the hands of millions of Americans thousands of dollars in student debt relief that was about to change their lives.”

Promising to provide further student loan relief by other means, the president said that the “decision has closed one path, and now we’re going to pursue another.”