Defrauded student loan borrowers seek the Education Department to erase their debt years after for-profit colleges cheat them out of money.
Almost 800 student loan debtors sent a letter to the Department of Education seeking immediate relief. The letter was joined by 26 organizations representing the defrauded student loan borrowers, including Ed Trust, the American Federation of Teachers, and the Center for American Progress.
The letter dated August 29 states, “We write as 26 organizations representing students, consumers, veterans, faculty and staff, civil rights advocates, and researchers to encourage the Department of Education (the Department) to use its authority under the Higher Education Act to relieve the outstanding loan balances of defrauded borrowers who have waited years for the relief due them.”
The borrowers stated that they are thankful for the actions the Education Department took to erase the debts of millions of cheated individuals; however, many still haven’t been able to get their debts erased.
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Lawyer Michael Lux, founder of the Student Loan Sherpa, told the media, “Many students were duped into enrolling in programs that charged exorbitant tuition prices and provided little value to students.” “Many of these for-profit institutions used deceptive and often coercive tactics to enrol students. These same students were sent out into the workforce without a marketable skill set or help finding a job from their schools.”
More than 300,000 Art Institutes student debtors witnessed $6.1 billion cleared, while almost a thousand University of the Phoenix borrowers saw $37 million in borrower claim approvals.
The Department of Education also approved student debt forgiveness for debtors in Westwood, Ashford University, College America, Corinthian Colleges, ITT Technical Institute, DeVry and others who paid student loans toward a non-creditable program.
The letter stated, “These announced discharges, along with other actions such as the settlement agreement in Sweet v. Cardona, demonstrate the Biden-Harris administration’s commitment to addressing loan debts of student borrowers who were the victims of predatory, abusive, and wasteful institutions.”
“However, recent reports have come to the attention of several of our organizations indicating that many borrowers have not seen the balances cleared from their accounts. These balances run the risk of negatively affecting borrowers’ financial standing. As repayment resumes, individuals can also be pushed back into repayment for debts they should not otherwise owe.”
Following the Education Department’s promise to erase student loans, the group of borrowers stated that in addition to borrowers waiting for debt forgiveness, “many more defrauded borrowers await recognition.”
Lux stated, “Forgiving these debts would be an acknowledgement that the Department of Education was asleep at the wheel when it certified these institutions and allowed students to borrow money to attend them.”
“For the borrowers directly impacted, forgiveness would be life-changing. In addition to no longer having a lifetime of student loan debts hanging over their heads, it would empower them to move forward with their lives, which could include having families or starting a business.”
According to the borrowers, students who use deceptive advertising still need to clear students of their debts.
The letter stated, “While we applaud the group discharge for Art Institutes borrowers, we are mindful that Education Management Corporation (EDMC)—the Art Institutes’ parent company—operated other large brands under the same corporate leadership, governed by company-wide policies that resulted in the same types of deceptive and unfair practices identified at the Art Institutes.” “Yet these other brands were not part of the May 2024 announced group discharge.”
The debtors also seek the department to “immediately use its authority to relieve the balances of student borrowers who were victims of EDMC-operated brands beyond Art Institutes.”
They demanded the same from many institutions, including Ashford University, Vatterott College, Florida Career College, UEI College, Kaplan, schools operated by Perdoceo, and other institutions recognized to have committed “systemic fraud against their students and Title IV programs.”
The letter said: “We recognize the myriad challenges confronting the Department, including the end of the on ramp period and the looming risk of default facing millions of borrowers, and we continue to advocate for Congress to allocate more resources for the Department to fulfill its critical work.” “However, we—along with many other advocates—strongly urge the Department to leverage its group discharge authority to bring long-overdue justice to defrauded borrowers who deserve relief from undeserved and harmful bad debts.”
Earlier this year, when the Department of Education announced that the 72,000 defrauded students could be eligible for complete debt forgiveness, Miguel Cardona stated “Borrowers deserve a simplified and fair path to relief when their institution’s misconduct has harmed them.”
