Madigan Leads Effort to Reinforce Need for Protections Against Worst Actors in For-Profit School Industry
Chicago —(ENEWSPF)–February 23, 2017. Attorney General Lisa Madigan yesterday sent a letter urging the U.S. Department of Education Secretary and Congressional leaders to express their support for recent federal protections for students in higher education and taxpayers.
Highlighting how many for-profit schools have harmed student borrowers, Madigan and the attorneys general sent a letter to U.S. Department of Education Secretary Elisabeth DeVos and U.S. Senate and House leadership detailing their concerns over rolling back federal protections that would signal “open season” on students for some of the worst actors in the for-profit school industry. Madigan referenced the thousands of complaints her office receives concerning higher education every year and her work to help students across the country who have incurred crushing amounts of debt for worthless degrees from many for-profit schools that engaged in fraudulent activity.
Madigan and the attorneys general pointed to a number of protections they believe should remain intact, including the Gainful Employment Rule, which ensures students who attend career training programs will qualify for employment and be able to repay their federal student loans once they graduate.
Madigan is also pushing to keep vigorous federal oversight of accreditors that are tasked with providing prospective students with quality assurance.
She is also promoting the continuation of the Borrower Defense to Repayment Rule, which will provide a fair and transparent process for students who have been defrauded by their schools to apply for federal student loan relief.
In part, the letter states:
Over the past fifteen years, millions of students have been defrauded by unscrupulous for-profit post-secondary schools. With accreditors asleep at the wheel, State Attorneys General Offices have stepped in to stop some of the worst abuses. The list of State Attorney General investigations and enforcement actions against for-profit colleges is long, including actions against: American Career Institute; Ashford University/Bridgepoint Education, Inc.; Corinthian Colleges, Inc.; Career Education Corporation; Education Management Corporation; Daymar College; DeVry University; ITT Tech; National College of Kentucky; and Westwood Colleges, among others.
These schools, and others like them, engaged in a variety of deceptive and abusive practices. Some promised prospective students jobs, careers, and further opportunities in education that the schools could not provide. Many schools inflated job placement numbers and/or promised career services resources that did not exist. Many nationally accredited schools promised that their credits would transfer, even though credits from nationally accredited schools often do not transfer to more rigorous regionally accredited schools. Many students were placed in loans that the schools knew from experience their graduates could not pay back. The schools were overseen by accreditors who failed to take action to protect students or the taxpayers who funded their federal student loans, despite ample evidence of these and other problems. In short, the entire for-profit education system was failing students and taxpayers.
As investigations and prosecutions initiated by our offices shed light on these problems, ED began to take steps to remedy these harms, issuing new regulations and reformulating policies to help protect students and taxpayers. Three of these steps – the Gainful Employment Rule, the policy of vigorous federal oversight of accreditors, and the Borrower Defense to Repayment Rule – are essential to protect both consumers and taxpayers from fraudulent actors in the for-profit education sector.
Attorney General Madigan is a national leader in investigating and enforcing consumer protection violations in the higher education field. Just last month, Madigan filed a lawsuit against Navient and its predecessor Sallie Mae for the companies’ mistreatment of student loan borrowers from start to finish – from originating student loans to servicing those loans and collecting on defaulted student loans. Madigan also has testified before Congress and urged the U.S. Department of Education to crack down on the many abuses and scams facing student borrowers.
In addition to today’s letter, Madigan has repeatedly called on the U.S. Department of Education to immediately forgive federal loans of students who attended fraudulent for-profit schools. Madigan reached a $15 million settlement with Westwood College in 2015 that forgave private debt owed by students of Westwood’s criminal justice program. After resolving Madigan’s lawsuit, the college announced its closure. More than 3,600 former Westwood College students in Illinois received an average of more than $4,200 in relief under the settlement, in addition to the potential federal loan relief called for by Madigan.
Madigan’s investigation into Everest College, which was operated by Corinthian Colleges Inc., revealed widespread misrepresentations made to prospective students, supporting the Department of Education’s own findings of fraud.
Madigan also reached a settlement with Education Management Corporation (EDMC), which operates five Illinois Institute of Art and Argosy University campuses in Illinois. The settlement requires EDMC to provide disclosure to students about the true cost of the school and expectations for job placement after graduation.
Madigan was also the first attorney general in the country to take action against a new industry of student loan debt relief scams. These scams target student loan borrowers who are desperate for help to avoid defaulting on their loans and end up getting scammed into paying money that does not help with their debt. Once these scammers illegally take upfront fees from borrowers, they do little to help them with their payments.
Madigan’s office runs a free Student Loan Helpline to provide student borrowers with free resources about repayment options, avoiding default or to file a complaint about loan servicing at (800) 455-2456 (TTY: 1-800-964-3013). More information can also be found on her website.
Joining Madigan in sending today’s letter were attorneys general from Connecticut, Delaware, Hawaii, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and the District of Columbia, as well as the Executive Director of the Office of Consumer Protection of Hawaii.
A copy of the letter sent today can be found here.