- NYC mayor Eric Adams announced $20 million in student debt relief for former Berkeley College students.
- The settlement was reached over a 2018 lawsuit accusing the school of defrauding borrowers.
- Senator Chuck Schumer touted the relief while pushing for Biden to cancel student debt broadly.
Relief is on the way for students who may have been allegedly defrauded by one of New York's largest for-profit colleges.
On Thursday, New York City Mayor Eric Adams announced an agreement with Berkeley College that will deliver $20 million in student debt relief to former students. In 2018, the New York City Department of Consumer and Worker Protection (DCWP) filed a lawsuit against the school stating that Berkeley "engaged in aggressive recruiting tactics designed to prey on the hopes and dreams of consumers seeking improved career prospects and greater financial security," according to the press release.
Berkeley College denied allegations at the time.
Per the terms of the settlement agreed to on January 11, Berkeley is required to stop collecting student debt incurred before January 1, 2o19, along with paying $350,000 to the city, which it will use for restitution payments to those impacted by the school's actions.
"Predatory for-profit schools like Berkeley College exploit hard-working New Yorkers turning their dreams into debt," New York Sen. Chuck Schumer said in a statement. "I am pleased to see the Adams administration take this decisive step to curb these practices and deliver debt relief to students. I will keep pushing President Biden to enact broad-based debt cancellation through executive action that will help all New Yorkers faced with the crushing burdens of student debt."
—Mayor Eric Adams (@NYCMayor) March 3, 2022
Over the past decade, for-profit schools have been under scrutiny over accusations of misleading borrowers and steering them into deeper student debt than they can afford to pay off. Since assuming office, President Joe Biden has canceled nearly $3 billion for borrowers defrauded by for-profit schools, most recently giving $415 million in relief to 16,000 students defrauded by private institutions.
While the student-debt relief announced by Adams comes from a settlement, and not the federal government, the reasoning behind the relief was nothing new. NYC accused Berkeley of misleading students into taking on debt that was not the best fit for them and failing to disclose costs associated with the debt, among other things. Adams said that former students who have questions about the settlement, and whether it applies to them, should contact DCWP.
Schools aren't the only ones being scrutinized for bad practices — the companies that service the loans are, as well. In January, Navient — one of the largest student-loan companies — reached a $1.8 billion settlement with 39 states attorneys-general over allegations of "widespread unfair, deceptive, and abusive student loan servicing practices and abuses in originating predatory student loans."
Navient denied any wrongdoing, but the Federal Student Aid office and Consumer Financial Protection Bureau have been taking steps to ensure student-loan companies, and schools, are held accountable if they take advantage of students and advertise loan options that are not financially suitable for the borrower.
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