Students who attended defunct CollegeAmerica in Colorado to receive $130M in federal student loan relief

The Biden administration will provide $130 million in student-loan relief to 7,400 students who attended CollegeAmerica’s Colorado campuses between 2006 and 2020 after the U.S. Department of Education determined the college’s parent company widely misrepresented itself, state and federal officials announced Tuesday.

The Colorado Attorney General’s Office aided in the multi-year investigation of the now-defunct college, which closed its three Colorado campuses in 2020. On Tuesday, the Education Department and state attorney general held a joint call with the press to make the announcement.

“CollegeAmerica knowingly took advantage of students by luring them into high-priced, low-quality programs with promises of high-earning potential and job placement that it knew were not attainable,” Colorado Attorney General Phil Weiser said in a Tuesday news release. “Protecting borrowers from predatory lending and helping Coloradans navigate through student loan burdens will continue to be a priority for our office.”

Borrowers will receive the relief regardless of whether they filed a “borrower defense to repayment” application, the news release said.

The relief wipes out all federal student debt acquired from Colorado’s CollegeAmerica brick-and-mortar campuses in Denver, Fort Collins or Colorado Springs during the specified time frame. The relief also will refund payments eligible CollegeAmerica Colorado borrowers already have made toward their loans, although officials did not know how much that dollar figure will amount to.

The Department of Education will begin notifying eligible borrowers in August about the debt relief. Borrowers will see any remaining loan balances zeroed out and credit trade lines deleted, the news release said.

Education Department investigators determined CollegeAmerica’s parent company, the Center for Excellence in Higher Education, widely misrepresented graduates’ salaries and employment rates, the programs the college offered and the terms of a private loan the school offered.

For example, the investigation found the Center for Excellence in Higher Education prominently advertised to students that its graduates would earn high salaries when, in fact, the center’s data showed Colorado CollegeAmerica graduates earned just $25,000, on average, five years out of school — less than the salaries of high school graduates, the news release said.

CollegeAmerica’s Colorado campuses also advertised inflated and falsified job placement rates of 70% when internal figures showed the real number was 40%.

“This included counting a business administration graduate working as a produce clerk and a medical specialties graduate working as a waiter as successful placements,” the news release said.

Weiser said CollegeAmerica graduates in Colorado were so ensnared in student debt — while often left without the training and education they were promised — that three years post-graduation, only 16% of students were able to pay back their student loan principal.

The Center for Excellence in Higher Education wrongfully told students its private loan product was “affordable,” when it was aware that in some years as many as 70% of CollegeAmerica borrowers enrolled at the Colorado campuses defaulted, the department said.

The shuttered college was mired in years of investigations and litigation, beginning in 2012 when the state attorney general probed the Center for Excellence in Higher Education and its leadership, culminating in a bench trial and, in 2020, a judgment favoring the state.

The Colorado Attorney General’s Office shared more than 300 trial exhibits with the Education Department, including internal policies, procedures and emails from the Center for Excellence in Higher Education. The department also reviewed trial testimony given under oath from 40 witnesses including experts, former students and center officials.