Education Department cancels $130M in student loans for attendees of shuttered CollegeAmerica

Higher Ed Dive

Jeremy Bauer-Wolf

July 25, 2023

Dive Brief:

• The U.S. Department of Education will forgive $130 million in student loan debt for some borrowers who attended the Colorado locations of CollegeAmerica, a closed chain of private institutions.

• The cancellation will benefit about 7,400 students who enrolled in CollegeAmerica between January 2006 and July 2020, the Education Department announced Tuesday. Agency officials said CollegeAmerica’s parent company — the shuttered Center for Excellence in Higher Education, or CEHE — misled students about salary and job prospects post graduation, its academic programs, and the terms of a private loan it offered.

• Borrowers will be notified in August about the discharge, which will occur automatically. Any payments those borrowers made to the Education Department will be refunded.

Dive Insight:

The Biden administration has prioritized loan cancellation, particularly for borrowers who attended colleges accused of misrepresenting their student outcomes and degree offerings. Most of these have been for-profit institutions, leading the sector to complain the White House has targeted them.

CollegeAmerica was at one point a for-profit institution, with locations in Arizona and Colorado.

However, in 2018, CEHE reached a deal with the Trump-era Education Department to transform CollegeAmerica and its other institutions into nonprofits. CEHE had sued the Obama administration over its refusal to transition its colleges to nonprofit status.

Before and after the conversion deal, CEHE and its colleges faced allegations they were running poor-quality programs that left students saddled with debt and few career possibilities. The Colorado campuses stopped enrolling new students in 2019 and closed by September 2020, according to the Education Department.

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