05/06/2017 - 13:14

AGs urge Education Secretary Devos to stop delaying student loan forgiveness for victims of predatory practices

In a letter sent today to U.S. Secretary of Education Betsy DeVos, Attorney General Maura Healey demanded that the U.S. Department of Education stop delaying processing loan discharges for thousands of Massachusetts students victimized by predatory for-profit schools.

AG Healey, joined by 18 attorneys general, urged the U.S. Department of Education to review the mounting discharge applications, including finalizing loan discharges that have already been approved. The attorneys general also renewed calls for the Department to implement an automatic group discharge process for all defrauded Corinthian students and requested that Secretary DeVos immediately stop garnishing wages and intercepting tax refunds of defrauded students.

“Our office has worked for years to secure relief for students victimized by for-profit schools, but the U.S. Department of Education has not fulfilled its promise to thousands of borrowers who continue to suffer financial harm,” AG Healey. “I join my colleagues today in seeking immediate answers from Secretary DeVos so that these students no longer have to deal with unnecessary debt from predatory schools that did not deliver.”

In March 2016, after submitting a group discharge application to the U.S. Department of Education for Massachusetts Corinthian students, AG Healey announced that the Department had agreed to forgive loans for more than 2,000 Massachusetts students who attended two campuses in Chelsea and Brighton. The AG’s Office subsequently held workshops and helped more than 1,200 former Corinthian students individually apply for loan discharges. Similarly, in January 2017, after submitting a group discharge application to the U.S. Department of Education for former students of American Career Institute (ACI), the Department agreed to automatically discharge loans for 4,500 ACI students in Massachusetts.

However, since these discharge announcements, many former students have experienced delays in the review, approval, or processing of their discharges. About 27,000 students nationwide have already been approved for loan forgiveness, but have yet to see their loans discharged. Some students are nearing the end of 12-month forbearances on their loans, and could face renewed monthly payment demands on debts that should have already been forgiven. According to the attorneys general letter, borrowers continue to be defrauded with each passing day.

“They have been either making payments on federal student loans that were originated based on Corinthian’s fraud, or have suffered the credit-crushing consequences of delinquency and default, including garnishment of wages, tax refunds, and social security or veteran benefits,” the letter states.

Today’s letter presses DeVos to provide information on what the U.S. Department of Education is doing to rectify the growing backlog of applications and a timeframe for discharging the associated student loan debt. In addition, since the Department of Education has already determined that these students are eligible for loan forgiveness, the letter asks DeVos to abandon the individual application process and support group automatic discharges for eligible Corinthian students.

Joining AG Healey in today’s letter are attorney general from Illinois, Washington, California, Connecticut, Delaware, Hawaii, Iowa, Kentucky, Maryland, Maine, Minnesota, Mississippi, New Mexico, New York, Oregon, Pennsylvania, Virginia, and the District of Columbia, as well as the Executive Director of the Office of Consumer Protection of Hawaii.

The AG’s Office filed a lawsuit against Corinthian in 2014, alleging that the school engaged in deceptive marketing and egregious high pressure sales tactics that left students with exorbitant and unaffordable student loan debt and without proper training or a career. In November 2015, the AG’s Office submitted a 2,700-page application to the Department requesting the immediate cancellation of student loans, following an event held with Senator Elizabeth Warren, at which former Corinthian students individually applied for discharges on the basis for the school’s misrepresentation of its programs, falsification of job placement rates and false promises of high-paying jobs.

AG Healey has taken a series of other actions against predatory for-profit schools and has made securing loan relief for students a top priority. In November 2016, the AG’s Office secured $2.4 million from national loan servicer ACS for failing to properly process applications for federal repayment plans and engaging in harassing debt collection practices. AG Healey has also announced enforcement actions against student debt relief companies, and filed lawsuits against ITT Tech and an unlicensed for-profit nursing school for alleged unfair and deceptive practices. The AG’s Office also has reached settlements worth more than $6 million with Kaplan Career Institute, Lincoln Tech, Sullivan & Cogliano, and Salter College. In March, the AG’s Office launched a campaign to help educate families about their higher education options and understand how to pay for them.

Students in Massachusetts looking for more information call the Student Loan Assistance Unit Hotline at 1-888-830-6277.