 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.
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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.
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