Why students need better protection from loan fraud

Across the nation, a few for-profit colleges have been deceiving studentsinto taking out private loans that cost more than advertised. Others have made false claims about job placement rates or have offered credits that don’t transfer and – in some cases –don’t qualify students for the licenses they need.

Veterans have been particularly targeted, with schools eyeing their GI benefits. And for-profit colleges generally attract a higher percentage of low-income students, making these students targets as well.

As a scholar of educational law and policy, I’ve spent many years studying student loans and the debt crisis. What’s clear is that students who have been victimized by fraud (particularly in the for-profit sector) need help when it comes to getting the justice they deserve.

Unfortunately, efforts by state and federal agencies haven’t brought full relief to everyone who was defrauded. Of the approximately 3,400 for-profit educational institutions in the U.S., at least 28 have undergone investigation. Four of the eight largest companies have faced significant legal action for unscrupulous recruiting or business practices.

Corinthian alone has more than 350,000 former students; and ITT Tech, another for-profit that filed for bankruptcy amid a cloud of fraud accusations, had more than 35,000 students when it closed.

Tens of thousands of students have filed claims with the U.S. Department of Education seeking relief from loans they took out to enroll in fraudulent institutions like Corinthian, but these claims haven’t been processed expeditiously. In fact, the department has dragged its heelssince Education Secretary Betsy DeVos took over. Not a single loan relief application has been approved this year and the Department is reexamining the rule that allows students to petition for debt relief.

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