How COVID-19 Has Impacted Thousands of Defrauded Student Borrowers | Blog

March 19, 2021

How COVID-19 Has Impacted Thousands of Defrauded Student Borrowers

“I felt like I simply do not have a fair chance to win.”

 

The COVID-19 pandemic has caused unprecedented economic vulnerability for millions of people across the country. For student borrowers who have been defrauded by for-profit colleges, this struggle has only been exacerbated.

 

Borrower defense applicants have been made particularly vulnerable during the pandemic-related economic downturn as a result of the Department of Education’s actions. Over 200,000 borrowers asserted their right to a borrower defense after being misled by their schools and convinced to take federal student loans for a bogus education. They were ignored by their government for years, some waiting over five years for a fair and reasoned response as to whether their loans would be cancelled. The vast majority are still waiting.

 

In an effort to understand how deep of an impact the pandemic has had on these borrowers, class members of our borrower defense lawsuit, Sweet v. Cardona (formerly Sweet v. DeVos), were surveyed in March 2021, a year after the pandemic hit. Out of the 425 individuals who responded, the majority are parents (60%), and female (58%). Thirty percent of respondents are Black, Latinx, Asian, or multiracial.  All have felt the effects of the COVID-19 pandemic and related economic crisis.

 

Here is a look at how the pandemic has impacted their income, jobs, and lives:

    • 18% are currently unemployed.
    • For nearly half of respondents (49%), their household lost a “significant” amount of income over the past year, and over a third (34%) applied for unemployment benefits.
    • 24% of borrowers (or a member of their household) are healthcare workers; or other kinds of essential and frontline workers (47%) including postal workers, transit workers, delivery drivers, public safety workers, and restaurant workers.
    • 10% are teachers.
    • The majority (66%) do not have jobs that allow them to work safely from home.
    • They (or a member of their household) have, in higher than average numbers, contracted the COVID-19 virus (22%), and/or lost a loved one to the disease (21%). 
    • 12% were pushed from the workforce by the need to care for children or immediate family members.

 

On top of this overwhelming impact on their livelihoods, these class members continue to face a massive debt burden that should have been eliminated years ago – compounding the financial hardships brought on by the pandemic.

    • They have been unable to qualify for loans (39%), been denied housing (19%), and disqualified from jobs (10%) all because of their student loan debt.
    • They report in great numbers (74%) having experienced mental or physical hardship as a result of their student loans in the past year.
    • The vast majority of these individuals report that, during the pandemic, their education—the source of their student loan debt—had not helped them at all (84%) or only helped a little (9%).
    • One quarter of them are in default.

 

Yet, 96% of respondents would be immediately helped by borrower defense cancellation.

 

That’s why earlier this month we sent newly-confirmed Secretary Cardona a letter urging him to do just that: Cancel all debts of former for-profit college students who have applied for borrower defense discharge; as well as all Corinthian College debt and ITT debt.

 

These borrowers are people who once had faith and trust in the system and the promise of higher education, but have been lied to and let down at every turn.

 

But their experiences are more than just data. These are some of their own words:

 

Borrowers who received a boilerplate denial letter have lost faith that they will be treated fairly:

 

“After years of waiting, suddenly everyone was denied. There is no way they could have reasonably looked at so many in so short a time. I honestly don’t think anyone actually thoroughly reviewed my application.”

 

“Said I need to provide more evidence. 60 pages of evidence wasn’t enough.”

 

“The explanation was brief. Simply stating that there was no evidence. Unfortunately several federal and private law suits during my enrollment prove predatory and dishonest enrollment practices. No information was given on how to appeal or get information on why I was denied.”

 

“Even though the company admitted in court they committed fraud with recruiting, school numbers, finances with students loans & etc. in court, the department of education still wouldn’t take that into consideration.”

 

“Denial stated that I did not have enough evidence. Heald is closed it is impossible to gather ‘evidence.’”

“The process is unfair and not realistic.”

 

“I felt like I simply do not have a fair chance to win.”

 

Borrowers who feel the Department’s bad faith administration of borrower defense has compounded on their harm:

 

“I applied for the borrower defense for repayment in 2015 and have submitted 2 applications with a significant amount of documents to support my case and still have not received any decision on my case, these fraudulent student loans are ruining my life.”

 

“It is very distressing having been deceived by a school and accruing a large sum of debt and then when applying for forgiveness having to wait over 4 years to find out a response about my application, and it’s made even worse during a pandemic when there is so much financial insecurity. Knowing that even while in deferment, my student loans are just steadily growing.”

 

“The mental hardship of waiting 4+ years for a decision on a person’s student loan debt (all while interest accrues) is astronomical. It would help a lot to have these loans forgiven since I have a $75K worthless piece of paper but the hardest thing has been waiting in limbo while the Dept. of Education sits quiet.”

 

“Attending Everest Institute has ruined my life, it left me homeless, taken away a tax refund and during this pandemic I have received no word from the Dept. Of Education. I haven’t heard from them since December 2019 and I have called 3 times since with no status of my forgiveness.”

 

“I’m a 70% service disabled veteran and am a certified service disabled veteran owned small business owner. The student loans caused me to be denied a small business loan 3x due to the debt to income ratio the loans have had on my credit score. I can’t receive any COVID 19 funding because my business is a start up and there is no payroll to report on.”

  

“i am 60 yrs, a Covid nurse with 80k and someday want to retire. My masters education at Kaplan never helped my career. it just placed a bigger financial issue and i don’t think i can retire someday.”

  

“I have come to the realization that attending National American University ensures that I will live in poverty until the day I die.”

 

These are only a handful of stories representing the hundreds of thousands of students across the country. It’s time to grant them the justice that is long past due.