FREQUENTLY ASKED QUESTIONS

Project on Predatory Student Lending

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This page addresses some of the most frequently asked questions about our cases and about our work at the Project on Predatory Student Lending.

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Questions About the For-Profit College Industry

What makes a school predatory?

For decades, the predatory for-profit college industry has exploited the promise of higher education at the expense of students who are trying to build a better life. The industry specifically targets low-income students, people of color, single parents, and veterans. These schools recruit students with lies and false promises of well-paying jobs and meaningful careers with the purpose of securing students’ federal student aid. If a company targets people it perceives as vulnerable for its misconduct or fraud, that school is predatory.

Are for-profit colleges regulated by the government?

The Department of Education is supposed to regulate for-profit colleges, but for decades has exercised little to no oversight of the industry. Instead of helping people who want an education, government funding and policies are helping this industry to cheat students. The for-profit college industry is among the most heavily subsidized of any private-sector industry, taking more than $30 billion in taxpayer money each year in the form of federal student aid. The Department of Education has the authority to stop the flow of federal money to these schools, but it has not.

Are predatory for-profit colleges still operating?

Although some predatory for-profit colleges have collapsed in recent years, there are still hundreds more operating across the country. They are actively marketing their bogus products to students they perceive as vulnerable, even in the midst of an economic crisis. In April 2020, the Project on Predatory Student Lending filed a lawsuit against one such company, Florida Career Colleges, for selling a predatory product and targeting Black students.

Questions About the Student Debt Cancellation Process

Can the federal government cancel student loans?

The Department of Education has the authority to cancel student loan debt.

What is borrower defense?

Borrowers who have been cheated by their school are eligible to have their federal student loans cancelled. This is a right that comes from federal law, common law, and student loan contracts. This type of loan cancellation is called Borrower Defense to Repayment, borrower defense, or defense to repayment.

If you are a student who has applied for borrower defense and are looking for information about the process, click here for more information.

What does forced arbitration mean in relation to for-profit colleges?

Forced arbitration is a tactic that for-profit colleges use to prevent students from suing them - forcing defrauded students into secretive out-of-court arbitrations and denying them the right to bring class action lawsuits. A critical component of the 2016 borrower defense rule allows the Department of Education to deny federal funds to institutions of higher education if they bar students from bringing class action lawsuits against their school or bringing their claims in court. Our lawsuit Bauer v. DeVos made the Department implement that rule, after it illegally delayed and refused to act on the rule. The 2019 borrower defense rule allows schools to go back to using forced arbitration, and we are representing the organization challenging that rule.

What is a closed school discharge?

The closed school discharge rule allows students to apply to cancel their loans if their school closes while they are enrolled or soon after they withdraw. The 2016 borrower defense rule included a provision that automatically cancels loans of some people eligible for closed school discharge three years after the school shuts down. Since we won the implementation of the 2016 borrower defense rule in court, the Department has cancelled at least $245 million due to the automatic closed school discharge provision.  Learn more about eligibility for closed school discharge here.

What is partial relief?

The Department of Education’s “partial relief” or “partial denial” formula was created by Education Secretary Betsy DeVos to deny students who were cheated by their school the full and complete debt cancellation they are legally owed when their borrower defense application is granted. The Department of Education has created two such formulas: one in 2017 and one in 2019. In May 2018, in a landmark decision, a federal judge stopped the use of the 2017 rule because it violated the Privacy Act. Since then, the Department has announced a revised scheme to try again to deny complete debt cancellation to students who were cheated. In June 2020, students filed a new lawsuit to stop this partial relief formula.

Can the government take your wages or tax refund to pay for student loans?

The government can and does use wage garnishment and tax offset to pay for federal student loans. However, there are many situations in which the government CANNOT legally do this, including if a student has a pending borrower defense application. For more information about collection actions on defaulted federal student loans, click here.

What are the economic impacts of cancelling student loans of for-profit college students?

Data show that cancelling student debt would bring significant, long-lasting economic benefits. Read more about the economic case for cancelling student debt.

Questions About Project on Predatory Lending Lawsuits

Why was Education Secretary Betsy DeVos held in contempt?

In October, 2019, Secretary DeVos was held in civil contempt and sanctioned for continued collection of student loan debts that she was prohibited from collecting. The contempt finding is in a class action lawsuit brought by former Corinthian Colleges students who we represent.

What is the latest in the case Sweet v. DeVos?

The Sweet v. DeVos lawsuit is about the Department’s refusal to decide any borrower defense claims for 18 months in 2018-19. In April 2020, students and the Department of Education proposed a settlement that would force the Department to decide all pending borrower defense claims. Information for class members is here. Plaintiffs in this case attended the Art Institute, ITT Technical Institute, Corinthian Colleges, and Sanford Brown, among other schools.

Why are students suing Florida Career College?

Students filed a class action lawsuit against Florida Career College (FCC) for using false representations and high-pressure sales tactics that leave students in mountains of debt they cannot repay, and for systematically targeting Black students. For more information about the FCC lawsuit, click here.

How can I get help from the Project on Predatory Student Lending?

The Project can represent a limited number of people. We prioritize cases where we can help a lot of people at once. If you are looking for legal help with debt from a for-profit college, click here.

Questions About Specific For-Profit Colleges

What do students from Heald, WyoTech or Everest need to know about Corinthian Colleges lawsuits?

We represent former students of Everest, Heald, or WyoTech in several different lawsuits. Students who attended Heald, Wyotech or Everest can click here to find out whether they are class members in the Calvillo Manriquez case, and to sign up for updates about that lawsuit.

What do Art Institutes students need to know about student loan cancellation?

If you are a current or former student of Art Institutes, South University, or Argosy University, click here for more information.

What do former ITT students need to know about the bankruptcy settlement?

On November 28, 2018 the judge in the ITT bankruptcy case gave final approval to the settlement between the student class and the estate of ITT. The settlement is a big victory for former ITT students who were defrauded by the school and canceled more than $500 million in student debt supposedly owed to ITT, returned $3 million collected from former students since ITT filed bankruptcy, and gave students a $1.5 billion allowed claim against the bankruptcy estate. The bankruptcy case is ongoing. If you are a former student of ITT Tech, click here for more information and to sign up for updates.