The Biden Department of Education announced today that it has approved $130 million in automatic loan cancellation for some 7,400 former students at Colorado campuses of the now shuttered CollegeAmerica career school chain, part of the collapsed, disgraced Center for Excellence in Higher Education (CEHE) operation.

A statement today from President Biden said of the former students, “These borrowers were lied to, ripped off, and saddled with mountains of debt.” It continued, “As long as I am president, we will never stop fighting to deliver relief to borrowers, hold bad actors accountable, and bring the promise of college to more Americans.”

In a press release, the Department said the relief, effected using its group discharge authority, is based on evidence from Colorado Attorney General Phil Weiser “showing widespread misrepresentations” by CEHE “about the salaries and employment rates of its graduates, the programs it offered, and the terms of a private loan product it offered.” 

On a call with reporters this morning, Rich Cordray, chief operating officer of the Department’s Office of Federal Student Aid, said, “Nothing can replace the time these students spent, the years that have passed, and the promises that were broken. But what we can do we will do to try to make things right.”

Weiser said CollegeAmerica “took advantage of people and preyed on vulnerable individuals” through ads and in-person sales pitches that provided false information about job placement and starting salaries. CEHE’s misconduct, Weiser said, “left students mired… in a deep hole and cycle of indebtedness” and “all the while CollegeAmerica was cashing checks and profiting.”

Asked on the call whether the Department planned to take steps to recoup student loan losses from CEHE or hold executives personally accountable, a senior Department official noted that the Department had, in 2021, suspended CEHE CEO Eric Juhlin from federal contracting.  The official added that CEHE founder Carl Barney does not own any institutions that are still participating in the federal aid program. 

The Department’s latest debt relief move is another encouraging measure. But there is much more to be done, including group debt relief for victims of other closed predatory chains, recoupment actions against schools, more efforts to hold bad actor executives like Barney and Juhlin personally responsible, and actions, like the recent one against Florida Career College, to cut off federal aid to deceptive schools. Many bad actors remain, including big ones like Perdoceo, Arizona Global, Purdue Global, and the University of Phoenix. 

In May, the Colorado Supreme Court unanimously rebuffed CEHE’s demand for a new trial of a case brought by the Colorado attorney general. In that case, a state trial judge in August 2020 found CEHE and its executives Barney and Juhlin liable for $3 million for deceiving students about matters including graduation rates and graduate starting salaries. 

Eight months after that 2020 court verdict, CEHE’s accreditor, ACCSC, withdrew approval of the schools. Soon after, the U.S. Department of Education suspended Juhlin from federal contracting and tightened conditions on federal student aid to the schools.  By August 2021, the CEHE schools, the largest of which at that point being online Independence University, closed down.

The Department said today that it reached its conclusion on debt relief for CollegeAmerica students who attended the school’s Colorado campuses at some point between January 1, 2006, and July 1, 2020, “based on its independent review of the Colorado evidence, as well as information from other borrower defense applications.”

Among the Department’s conclusions:

From 2006 until 2020, CEHE prominently included in its admission and advertising materials that its graduates would earn high salaries. But the included data was misleadingly based on national averages. In fact, internal CEHE data showed Colorado CollegeAmerica campus graduates on average earned just $25,000 five years out of school, less than the salaries of high school graduates publicized by the school.

From 2009 through 2012, and again in 2015, CollegeAmerica campuses in Colorado advertised inflated and falsified job placement rates of 70 percent, when internal figures showed the actual number was 40 percent. This included counting a business administration graduate working as a produce clerk and a medical specialties graduate working as a waiter as successful placements.

From 2007 through 2017, CEHE falsely told students that its private loan product was “affordable,” when it knew that some years as many as 70 percent of CollegeAmerica borrowers enrolled in the Colorado campuses defaulted. Overall, more than 850 CollegeAmerica students had judgments filed against them by CEHE’s debt collectors.

Starting in 2006 and continuing until 2014, CEHE lied to students of the Colorado CollegeAmerica campuses by telling them that it either offered certain programs or that a given offering would qualify the borrower for employment in a given field. For instance, from 2006 through 2012, CEHE claimed that a medical specialties program would allow students to obtain the certifications to become an X-ray technician, though the school did not even own any X-ray machines.

In response to another question on today’s call, about CEHE’s continuing aggressive efforts to collect debts from students on its private “EduPlan” loans,  a senior official from the Colorado attorney general’s office said there is “ongoing litigation happening… and there are issues not before the department that involves private loans… But  I think that is adjacent to the department who I don’t believe has the authority to address those private loans.” Court records indicate that the federal Consumer Financial Protection Bureau, which does have authority over private, non-government student loans, has been investigating CEHE over its private loans. The Colorado trial court found that the EduPlan loans were part of CEHE’s deceptive scheme.

CEHE, Juhlin, and Barney have repeatedly claimed that CEHE did nothing wrong and that they are being persecuted for political reasons. CEHE took its grievance campaign to a new low last December by suing the United States government for $500 million in the U.S. Court of Claims, asserting, as a press release statement by Juhlin contended, that the Department of Education “in coordination with ideological confederates… has been on a campaign to cripple and close as many private career colleges as possible” and that CEHE’s schools were “a victim of this campaign.”

The Department says it will begin notifying eligible former CEHE students in August that they are approved for discharges. “Borrowers will see any remaining loan balances zeroed out and credit trade lines deleted,” the Department said. “Any payments they made to the Department will be refunded.” 

The Department said the Biden-Harris Administration has now approved $14.7 billion in relief for 1.1 million borrowers “whose colleges took advantage of them or closed abruptly.”