NEW DATA: 96% of Students Defrauded by For-Profit Colleges Report their Lives are Worse Now than Before they Went to School | Press Release

July 23, 2019

Nearly 900 Former For-Profit College Students Submitted Testimony Explaining the Harsh Impact of Federal Student Loan Debt on their Lives  

 

Testimony Includes Stories from Students who Have Put Off Other Education, Avoided Starting Families & Some Considered Suicide because of their Student Loan Debt 

 

BOSTON, M.A. – Today, the Project on Predatory Student Lending announced that nearly 900 defrauded former for-profit college students submitted personal testimony in a lawsuit, Sweet v DeVos, against the U.S. Department of Education and U.S. Education Secretary Betsy DeVos. They are seeking to force the agency to follow existing law and issue the debt relief to which the former students are entitled.

In less than a month after the lawsuit was filed, hundreds of students voluntarily submitted their testimony to have their voices heard. The extensive testimony provides a comprehensive summary of the harsh real-life impact of the continued debt on students’ lives due to the Department of Education’s refusal to process their claims. Specifically, students reported the overwhelming harm that this debt and uncertainty has had on their lives, from financial and mental health consequences, to delaying basic life decisions like starting a family or pursuing additional education.

The testimony data shows:

  • 96 percent of students reported that their lives are worse today than before they went to school.
  • 92 percent of students reported experiencing physical or emotional harm.
  • 61 percent of students reported deferring further education because of no decision on debt.
  • 47 percent of students reported deferring marriage and children because of no decision on debt.
  • 32 percent of students reported continuing to receive payment demands after submitting their Defense to Repayment.
  • 958 days (2.6 years) is the average time students have been waiting for an answer from the U.S. Department of Education on their Borrower Defense applications.

“My claim has gone unanswered for over three and a half years. That’s ridiculous,” said Denise Heard-Bashur, former student at the Art Institute of Pittsburgh. “The Art Institute has even closed in that time. Those of us who were financially abused by for-profit educational institutions deserve to be considered. We were fed lies by society that a degree would ensure financial stability. It doesn’t. We were fed lies by these organizations that we would land great jobs, especially with their help. We haven’t. We were fed lies that our course credits would transfer should we decide to pursue our education elsewhere. They won’t. The government under the Trump administration has done nothing but prove in every way, shape and form that the average American is the very least of their concerns.”

The former students are pressing Secretary DeVos and the Department to follow the law and immediately act to cancel their loans. The Department has not processed a single borrower defense claim in over a year with many of these former students waiting over four years for resolution.

“By ignoring these claims, Betsy DeVos is willfully harming the very students the Department of Education is supposed to protect,” said Project on Predatory Student Lending Legal Director Eileen Connor. “The harm these students have experienced is undeniable. Many of these students are parents who can’t earn a living wage to support their families. Many expressed emotional and physical trauma caused by this illegitimate debt and the fear they will be denied loan cancellation. Several of the students said they have even contemplated suicide because of their debt. Their faith in government is understandably eroded. The time for excuses from the Department of Education is over. The Department needs to follow the law and cancel these loans now because hundreds of thousands of students cannot afford to wait any longer.”

“I have an overwhelming fear of debt because of this money that was wasted with this school,” said Morgan Marler, former student at ITT Technical Institute. “I can’t find a school that takes any credits from ITT and also I can’t find the strength to go to another school because I will be in twice the amount of debt. I worry that my daughter will have to feel the effects of this debt – I pushed myself in school to better myself for her, she was one when I graduated. I thought I’d have a better life for her than this.”

Click here to view testimonial excerpts and videos from students across the country who were defrauded by for-profit colleges.

The case, Sweet v DeVos, was filed on June 25, 2019 in the United States District Court for the Northern District of California in the San Francisco Bay Area. The plaintiffs, represented by the Project on Predatory Student Lending at Harvard’s Legal Services Center along with Housing & Economic Rights Advocates (HERA), are suing on behalf of a class of more than 158,000 former students who have filed applications for borrower defense to repayment. As the complaint states, the Department of Education is intentionally ignoring students’ borrower defense claims, has taken no action to resolve them, and in many instances, forcibly collects loans in spite of the students’ claims that the loans are not valid.

Under existing law, students and former students are eligible for federal loan cancellation if the college misled the students or violated state laws relating to the students’ education—as is the case for all the colleges these former students received loans to attend.

“Students are calling for the Department to act,” said HERA Senior Attorney, Natalie Lyons. “It is shameful that the Department continues to sit on tens of thousands of borrower defense applications, in light of the additional harms caused by its inaction. Surely it is enough that these former for-profit students expended money, time and energy on a fraudulent education. As powerfully described by the nearly 900 students’ own words, the Department’s silence causes significant anxiety and distress in their day-to-day lives, as well as active harm to their livelihoods.”

The Project on Predatory Student Lending is continuing to call for students—specifically those who were cheated by for-profit colleges and are awaiting the Department’s decision on their borrower defense claims—to support the litigation and share with the court the countless ways they have been hurt by the for-profit college industry and the Department. Students can continue to supply written testimony in this lawsuit by filling out a simple online form here.

Currently, 45 million Americans have nearly $1.6 trillion combined in student loan debt, depressing the economic progression of families and the broader economy. This lawsuit addresses the most pernicious type of student loan debt—the kind made to students at abusive for-profit colleges. The Department of Education issued these loans despite glaring indicators that the schools would do nothing but rip off students. Ultimately, the students are paying the price for a worthless degree that has failed to improve their lives, and in many cases, has caused severe personal and economic setbacks. For-profit colleges account for 13 percent of the student population, but 47 percent of federal loan defaults. And 98 percent of all loan cancellation applications sent to the federal government in 2016 and 2017 were due to fraudulent for-profit colleges.

Background on the Case:

Over the past several decades, hundreds of thousands of students borrowed federal student loans to attend various for-profit colleges, including ITT Technical Institute, Corinthian Colleges, the Art Institutes, the New England Institute of Art, Salter College, Brooks Institute of Photography, and more. The schools falsely and deceptively promised students high-paying jobs, state-of-the-art vocational training, and long and fulfilling careers.

Since 2015, over 200,000 of these former students have asserted their right according to existing federal law to a complete discharge of their federal student loans due to their schools’ misconduct. As it was legally obligated to do, the Department of Education started to adjudicate these borrower defenses, approving nearly 28,000 borrower defenses in the six-month period before January 20, 2017.

Since then, under Secretary DeVos’ tenure, the Department of Education halted all processing of borrower defense claims. It has refused to adjudicate any borrower defense from any student since May 2018, and has ordered the office of Federal Student Aid (“FSA”) to stop processing any borrower defense application.

The Department of Education’s affirmative decision to keep these students in limbo—some for over four years—has further destroyed students’ credit and limited their access to federal student aid. For students who have defaulted on their loans, the Department of Education has invoked extraordinary extrajudicial powers to garnish their wages or seize their tax credits (for many, their Earned Income Tax Credit).

Named Plaintiffs bring this lawsuit under the Administrative Procedure Act on behalf of themselves and all other former students whose claims for loan cancellation have stalled.

This lawsuit builds on past legal efforts to hold this administration accountable and protect students through court action. In the case of Williams v DeVos, students fought back against having their tax refunds stolen by the Department of Education, and won. In the case of Calvillo Manriquez v DeVos, students stopped the Department from using its illegal partial denial rule. And in Bauer v DeVos, a judge told the Department of Education that it must implement the 2016 Borrower Defense rule.

About the Project on Predatory Student Lending

Established in 2012, the Project on Predatory Student Lending represents former students of predatory for-profit colleges. Its mission is to litigate to make it legally and financially impossible for federally-funded predatory schools to cheat students and taxpayers.

The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt.

About HERA

Housing and Economic Rights Advocates (HERA) is a California statewide, not-for-profit legal service and advocacy organization dedicated to helping Californians — particularly those most vulnerable — build a safe, sound financial future, free of discrimination and economic abuses, in all aspects of household financial concerns. It provides free legal services, consumer workshops, training for professionals and community organizing support, creates innovative solutions and engages in policy work locally, statewide and nationally.

 

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