It is good news that the Department of Education and Congress are starting to take a closer look at the for-profit higher education industry. Our low-income clients have struggled for years trying to pay back debts from rip-off schools. Unfortunately, we have seen a steady increase in complaints in recent years. This is not surprising given the astronomical growth in this industry and the constant push to bring in new students to fuel profits.
The U.S. Senate held a hearing on June 24, focusing on the federal investment in the for-profit sector. The Senate’s Health, Education and Labor Committee issued a report on this topic, focusing on the high cost to taxpayers and borrowers of the federal investment in for-profit higher education. The Administration recently issued proposed regulations on “program integrity.”
We hope that Congress and the Administration will take action to help put an end to abuses in this sector. This action must include relief for borrows who have been harmed by abusive practices. The numbers cited in the Senate report are critical, but numbers cannot fully portray the human toll. To help show the costs to individual borrowers, we will post periodic summaries of clients we are working with. Here are a few recent cases:
- Our client is a 23 year old woman living in a homeless shelter. She receives less than $350/month in public assistance benefits plus food stamps. She saw ads for a local for-profit school a few years ago. She had dropped out of high school, did not have a G.E.D., and was looking for a way to find work. The school signed her up without giving her the required ability to benefit test. We are still investigating her case, but it appears that she has a private loan, not a federal loan. She attended for about three weeks. She said the school was “horrible” and that she didn’t learn anything. She dropped out because she heard from fellow students that she would only be able to get work in the field if she had a high school diploma or G.E.D. Among other problems, because of the student loan delinquency on her credit report, she is now having trouble finding work. She is also very discouraged about going back to school.
- Our client is a 28 year old woman with one child. Her sole income is through public assistance. She attended a local proprietary school in 2006. She did not have a high school diploma or G.E.D. at the time. She completed the medical assistant course, but never found work. She said that the potential employers told her that they would only hire people with high school diplomas. She is upset because she told the school when she signed up that she didn’t have a high school diploma and was in fact attracted to the school because of ads that encourage those without diplomas to come in. She was given an ability to benefit test, but failed the first time. They gave it to her again. We are investigating to see if she might qualify for a false certification discharge. She has almost $7,000 in federal loans plus significant Pell grants. She is in default on the loans and was recently told by her servicer (inaccurately) that she would have to pay $900 to get out of default. (These borrowers not only face problems with the school, but are then stuck dealing with the deceptive and often illegal practices of servicers and collectors.) This client wants to go back to school, but can’t because she is in default. Next time, she says, if she can get out of default, she will go to community college.
- Our client is 21 years old and attended a local for-profit school in 2009, taking a medical assistant course. She described numerous problems with the school and said it was a terrible experience. She asked early on about dropping out, but was told (erroneously) that she would owe the loan money regardless. She stayed in school, finished, but never found work. She has over $6,000 in federal loans, not yet in default. She has one child and limited public assistance income. She was most upset that the school representatives told her that she could transfer credits if she completed the course. She said she later found out that this was a “complete lie.” She wants to go back to school some day, but is worried about how to pay for it and how to avoid getting into the same trap.
