For years, predatory for-profit colleges have exploited the promise of higher education, cheating
students and leaving them in mountains of debt they never should have had. Making it worse, the industry has been enabled by a Department of Education that has made excuse after excuse about why it can not step in to help students.
Last week, the Education Department ran out of excuses.
In a settlement, students of one for-profit college have finally been acknowledged, and their debts cancelled as unenforceable. And it wasn’t just any for-profit college, it was one of the most infamous — ITT Technical Institute.
ITT had systematically cheated its students for years. ITT lied to students about financial aid and tuition costs. It lied to them about education quality and accreditation. And it lied to them about the job prospects they would earn and career placement services they would receive.
It would be simpler to list the things ITT didn’t lie to students about.
ITT students incurred billions of dollars in debt they never would have — if not for ITT’s predatory behavior — and faced that debt without the promised job prospects. Thousands of former ITT students filed applications with the Education Department to cancel their federal loans. And when ITT closed its doors, students brought an action in ITT’s bankruptcy to cancel the debts owed to the company.
It would be understandable if you figured that the Department of Education — the agency charged with protecting students and taxpayers — would be first to step up and cancel these predatory loans.
But it was ITT’s estate that bowed to the weight of evidence and agreed to cancel nearly $600 million in debts in a settlement with the class of students represented by our organization.
ITT students are finally getting some relief, but not nearly enough. The vast majority of students’ debt remains in the form of federal loans controlled by the Department of Education. And not only have Secretary Betsy DeVos and her predecessors refused to cancel these loans, they are continuing to collect on them.
This has a devastating impact on students and their families. One former student, Paul, attended ITT’s campus in Springfield, Va., where he was promised a stellar education in computing. Ultimately, he attempted to transfer, only to find out that other schools would not take ITT credits.
After graduating from ITT, Paul has been able to obtain only temporary and contract jobs. He has learned that as he applies for jobs, he is better off not even mentioning ITT. Paul isn’t alone — more than 500 former students wrote in their discharge applications that they had better luck applying for jobs when they took ITT off their resumes.
While last week’s settlement cancels about $3,000 of Paul’s debt, he still has nearly $32,000 in federal loans outstanding that he cannot afford to repay. He applied to have his federal loans cancelled in 2016, and has yet to receive a response from the Department of Education.
Paul is one of nearly 7,000 former ITT Tech students who applied to the department to discharge their loans. Despite the clear case that these students have been cheated and their loans are invalid, only a handful of those applications have been granted, and none has been granted since DeVos took over.
The Department of Education also has repeatedly delayed, and is now attempting to rewrite, a rule that would have clarified the process for cheated student borrowers to cancel their debt. The rule would have provided an expedited procedure for students of schools such as ITT that shut down and left their students with crippling debt. The rule would also have prohibited forced arbitration, which ITT used aggressively to keep evidence of its wrongdoing out of the public eye.
Not only is the department failing to act on borrowers’ legal right to loan cancellations, it’s brazenly attempting to eliminate rights and empower harmful companies to profit off of students’ attempts to improve their lives. That’s why former students, our organization and so many others are continuing to push the department to cancel all ITT loans and the loans of millions of other students cheated by predatory for-profit colleges.
When the bankruptcy estate of a for-profit college does better by students than the Department of Education, something is significantly wrong. The time for the department to cancel the loans for defrauded for-profit students is now. The time for excuses is over.
Toby Merrill and Eileen Connor are director and litigation director of the Project on Predatory Student Lending.