Issues

Exploiting the promise of higher education

The Project on Predatory Student Lending represents students in their efforts to assert their rights against predatory for-profit colleges and the Department of Education, which chooses to enable these companies rather than defend students. We bring cases that can change this corrupted system and address the policies and issues that keep this predatory industry alive.

Borrower Defense

 

Federal student loans are contracts between an individual borrower and the U.S. Department of Education (or, prior to 2010, between a borrower and private lender backed by the U.S. Department of Education).  Federal student loans are made only to borrowers who are enrolled in institutions approved by (and in a separate contractual relationship) with the Department of Education. Institutions are supposed to follow Department regulations and all applicable laws designed to protect students from unscrupulous and predatory behavior. When an institution falls short and deceives or cheats its students, those students have a “borrower defense to repayment,” often shortened to “borrower defense.”  Their loans are not valid and do not need to be repaid by the borrower. Separately, the Department of Education can attempt to collect the amount of the invalid loan from the institution that committed misconduct.

Borrower defense is an important safety valve for individual borrowers, and it is also a critical means for ensuring the Department of Education has an incentive to make loans only for institutions that don’t cheat students. The Federal Trade Commission has a similar rule that since 1976 has applied to private student loans made to students at for-profit colleges.

Although the road to loan cancellation through borrower defense has been at times lengthy and trying for many applicants, the Project’s litigation has upheld students’ right to borrower defense in courts – and we have won every single time. With borrower defense, the law is on the side of borrowers.

ITT Report

Our recently released report details the massive scale of fraud and abuse by the defunct for-profit college ITT. The report presents the largest volume of evidence compiled on ITT, and the documents unequivocally show that ITT was not a legitimate educational institution: it systematically and brazenly lied to students in order to profit from their federal financial aid.

For-Profit Colleges and Racial Justice

The tax payer-funded for-profit college industry specifically targets students of color with aggressive and manipulative advertising and high pressure sales tactics. Black and Latino students are disproportionately harmed. The debt associated with for-profit colleges is not only predatory, but racist. Click below to learn more about for-profit colleges and racial justice.

Private Student Loans and For-Profit Colleges

For years, private student loans have had devastating effects on student borrowers. Many private student lenders made huge profits by collaborating with predatory for-profit schools. The government has failed to hold these lenders accountable while borrowers, particularly low-income borrowers and borrowers of color, remain buried in debt.

Cancel Corinthian

In May 2018, a major court ruling stopped the Department of Education from partially denying loan cancellation to certain students who attended Corinthian Colleges (Heald, Everest, and WyoTech) and ordered the Department of Education to stop collecting on the loans of the subset of those students who have applied for borrower defense loan cancellation.

Still, the Department of Education continued to ignore federal court orders and argue against granting full and complete loan cancellation to people who were cheated by the for-profit college and has appealed the decision to a higher court. In 2021, the Department finally relented and announced its intention to grant complete relief to everyone who had previously been told they would get partial relief.

The Department should be holding sham schools accountable, not fighting to make those who were cheated pay even more.

That’s why we will continue calling on the Department to do the right thing and cancel all Corinthian debt. So will our friends and partners.

Student Experiences

 

Mary is a single mom who entered the Medical Assistant program at Everest Institute. The quality of the program was horrible. The students were forced to practice on themselves. One time, a student practiced drawing blood from Mary but due to a lack of training from the program, forgot to take the tourniquet out before the needle, and Mary’s blood spilled everywhere. Mary had to abandon the program. Shortly thereafter, she couldn’t find a job, lost her apartment, and lived in a shelter for two years. She never got a medical job, and is now a domestic violence case manager. She is in default on her $7000 in student loans from Everest Institute.

Christine left high school at age 15 when she had a child. After enrolling in community college, she was drawn into Everest with the promise that she would get a job as a medical technician more quickly at Everest than if she remained at community college. Had she stayed at community college, she would have graduated debt-free. Instead, she has tens of thousands of dollars in student loans. She has managed to find work outside the medical field earning minimum wage, but these wages are being garnished because she fell behind on her student loan payments. She’s currently living in a shelter with her daughter, and had planned to use her tax refund as security deposit on an apartment. Instead, this money was seized by the government to pay for her debt to this fraudulent “school.”

Tina attended a Medical Assisting program at Sanford-Brown Institute (SBI), relying on SBI’s promises that its graduates had high rates of employment in their field of study; that SBI would provide meaningful job placement assistance; and that SBI’s credits were widely transferrable to legitimate higher education institutions. Only after incurring substantial student loan debt and graduating with a 4.0 grade point average, despite a period of homelessness, did Tina learn that all of these promises were false. After graduation, the only employment Tina could find was a part-time retail job paying little more than minimum wage, where she worked for almost four years to make ends meet. Tina is rightfully proud of her perseverance in obtaining her degree, but feels that in all practical senses, her degree is worthless.