Based on an independent review by the Department of Education (ED) the degrees obtained by the students are "effectively worthless." This deception by the former Ashford University about the costs, time requirements and values of its degree programs became the basis of the student loan cancellation.
"These borrowers were lied to about the cost of attending Ashford, were misled about how long it would take to get a degree and were deceived about the transferability of Ashford credits. They deserve better," Biden himself said in a statement. He stressed that his administration "won't stand for colleges taking advantage of hardworking students and borrowers."
But observers think Biden simply wants to show the Supreme Court who's the boss.
His administration earlier announced the cancellation of $39 billion in student debt, which would benefit more than 800,000 borrowers. This, coupled with the $72 million to be forgiven, shows the president's persistence to circumvent the Supreme Court's decision to strike down the policy.
Back in June, the high court voted 6-3 to strike down Biden's $800 billion student loan forgiveness plan. Under the scheme, debts of as much as $20,000 could be canceled for 40 million borrowers. Fortunately, the Supreme Court stepped in and threw a wrench in his plans.
"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," Biden said at the time. "[The Supreme Court] decision has closed one path, and now we're going to pursue another." The president also promised a "new way" to circumvent the high court's decision.
Biden's ED helped him find that way.
According to the ED's review, only around 25 percent of students in Ashford graduated within eight years of enrollment. Not only will the more than 2,300 student loan borrowers see their loan balances zeroed out, but the $72 million will also go toward refunding them for the payments they made on their loans. The ED will email those eligible for student loan forgiveness in September.
Formerly based in San Diego, Ashford University boasted of having more than 100,000 students in its heyday. The University of Arizona (UA) later acquired it for $1 in 2020, renaming and restructuring it as the online nonprofit UA Global Campus. (Related: Survey: The average American has over $54,000 worth of debt and would do almost anything to get rid of it.)
James Kvaal, education under secretary, said in a statement: "We are protecting the students who were cheated by Ashford, and we will also hold the perpetrators accountable, protect taxpayers and deter future wrongdoing."
Aside from the ED review, a lawsuit filed by the California Department of Justice (CADOJ) against Ashford and its parent company Zovio also served as the basis for the loan forgiveness plan.
Evidence uncovered from the lawsuit proved that Ashford and Zovio "made numerous substantial misrepresentations" between March 1, 2009 and April 30, 2020 "that borrowers relied upon to their detriment." The court ruled in favor of the CADOJ, concluding that Ashford had made more than 1.2 million misleading representations nationwide to prospective students.
Still, many Americans believe the student loan forgiveness plan is just a vote-buying scheme in disguise, with Biden literally giving away taxpayer money to potential voters.
Visit DebtCollapse.com for more stories about student loans.
Watch this clip from Fox Business detailing how Biden's new Supreme Court-subverting student loan forgiveness plan could cost American taxpayers over $475 billion over the next 10 years.