Thousands of student borrowers are awaiting relief from federal students loans they say were obtained through fraudulent and misleading actions by the colleges and universities they trusted with their educations. This week, Senator Patty Murray (D-WA) released new Education Department data on these 158,000 outstanding “borrower defense” claims for loan relief, data she obtained from department responses to questions for the record following a hearing in March. The data released includes up-to-date information on which colleges have had borrower defense claims made against them. As the newly released data further confirms, most claims come from students who attended for-profit institutions; in fact, the top twenty college operators generating claims are all for-profit companies or were for-profits in their recent history.
Borrower Defense Regulations and the DeVos Education Department
The Obama administration first introduced the current borrower defense rules in 2016, intending to improve and clarify the process for students to obtain loan relief if they were defrauded by an institution. However, a month before the Obama rules were set to take effect in July of 2017, the DeVos Education Department delayed their implementation and announced its plans to revise them. Courts eventually deemed the delay illegal, and the Department of Education was ordered to implement the current rule even as it attempts to rewrite the regulation. If finalized by November 1, 2019, the newly rewritten rules will take effect in mid-2020. In the meantime, despite the Obama-era regulations still being in effect, the department continues to defy court orders that require the rightful discharging of loans to borrowers.
Since the beginning of the Trump administration and DeVos’s secretaryship, the Department of Education’s refusal to discharge has allowed the number of pending borrower defense claims to reach 158,000.
Since the beginning of the Trump administration and DeVos’s secretaryship, the Department of Education’s refusal to discharge has allowed the number of pending borrower defense claims to reach 158,000. All the while, the department has stalled and dissembled, claiming that its staff’s hands are tied on the matter.
The data released this week by Senator Murray, which is summarized in Figure 1 below, provides updated information on a known trend—namely, that for-profit colleges are leading causes of borrower defense claims. In 2017, The Century Foundation published data on the schools generating the most borrower defense complaints (updated March, 2018), finding that the for-profit sector is still responsible for over 98 percent of complaints. The newly released data confirms that pattern: the top twenty college operators with the highest numbers of student borrower defense complaints are all for-profit conglomerates or nonprofit conversions (see Figure 1).
Figure 1
Borrower Defense Applications by School Group |
School Group |
Applications Received |
Percent of Applications Processed by the Department |
Corinthian Colleges, Inc. |
113,066 |
50% |
ITT Educational Services, Inc. |
19,213 |
1% |
DeVry University, Cogswell Education LLC |
13,543 |
0% |
Apollo Education Group, Inc. (University Of Phoenix) |
8,139 |
0% |
Education Management Corporation |
6,284 |
0% |
Career Education Corporation |
5,667 |
0% |
American Career Institute |
3,011 |
97% |
Westwood |
2,371 |
0% |
Graham Holdings Company (Kaplan) |
1,919 |
0% |
Globe University/Minnesota School Of Business |
1,530 |
0% |
Dream Center Education Holdings (DCEH) |
1,490 |
0% |
Education Corporation of America (Willis Stein & Partners III, L.P.) |
1,387 |
0% |
Bridgepoint Education, Inc. |
962 |
0% |
Infilaw Holding, LLC |
923 |
0% |
Marinello School Of Beauty |
806 |
1% |
Ati Career Training |
739 |
0% |
Sp/Palm Iec Holdings LLC (United Education Institute) |
616 |
0% |
Lincoln Technical Institute, Inc. |
584 |
0% |
Weston Educational, Inc. |
449 |
0% |
Anthem College |
431 |
0% |
Note: The number of pending applications for each school are not provided due to a risk of an inadvertent privacy disclosure resulting from small cell sizes.
Source: Department of Education response to the Office of Senator Patty Murray.
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The school groups with the greatest increase in numbers of claims since TCF’s March 2018 update were Corinthian Colleges and ITT, two schools that had collapsed in 2015 and 2016, respectively. Education Corporation of America, which operated Virginia College and other for-profit chains that collapsed last year, also generated a huge spike in borrower defense claims, suggesting that in the run-up to its precipitous closure, ECA was misleading students in addition to mismanaging its finances.
Moreover, a deeper dive into Department of Education data released by Senator Murray shows that all of the forty-seven schools that had 500 or more pending borrower defense applications at that time were for-profit or were recently for-profit companies (covert for-profit schools) (see Figure 2).
Figure 2
Institutions with Over 500 Pending Borrower Defense Applications |
Data as of 12/31/2018 |
Institution |
City |
State |
School Type |
Pending Applications |
DeVry University |
Chicago |
IL |
For-profit |
12,505 |
ITT Technical Institute |
Indianapolis |
IN |
For-profit |
10,107 |
University of Phoenix |
Phoenix |
AZ |
For-profit |
8,556 |
Altierus Career College |
Orlando |
FL |
Private, nonprofit* |
7,996 |
Everest University |
Tampa |
FL |
For-profit |
2,417 |
Purdue University Global |
Indianapolis |
IN |
Public** |
1,710 |
WyoTech |
Laramie |
WY |
Private, nonprofit* |
1,644 |
Heald College |
Honolulu |
HI |
For-profit |
1,342 |
WyoTech |
Blairsville |
PA |
Private, nonprofit* |
1,268 |
Heald College |
Fresno |
CA |
For-profit |
1,113 |
WyoTech |
Fremont |
CA |
For-profit |
1,075 |
Heald College |
Hayward |
CA |
For-profit |
1,041 |
Ashford University |
San Diego |
CA |
For-profit |
1,022 |
Heald College |
San Francisco |
CA |
For-profit |
1,014 |
Charlotte School of Law |
Charlotte |
NC |
For-profit |
1,011 |
Heald College |
Concord |
CA |
For-profit |
955 |
Heald College |
Milpitas |
CA |
For-profit |
940 |
Heald College |
Stockton |
CA |
For-profit |
931 |
Art Institute of Pittsburgh (The) |
Pittsburgh |
PA |
For-profit |
884 |
Everest University – Pompano Beach |
Pompano Beach |
FL |
For-profit |
873 |
Heald College |
Roseville |
CA |
For-profit |
838 |
Heald College |
Rancho Cordova |
CA |
For-profit |
838 |
Minnesota School of Business |
Richfield |
MN |
For-profit |
800 |
Altierus Career College |
Tampa |
FL |
Private, nonprofit* |
779 |
Westwood College – Denver North |
Denver |
CO |
For-profit |
750 |
WyoTech |
Long Beach |
CA |
For-profit |
734 |
Heald College |
Salinas |
CA |
For-profit |
702 |
Everest College Phoenix |
Phoenix |
AZ |
For-profit |
691 |
WyoTech |
City of Industry |
CA |
For-profit |
677 |
Everest Institute |
Rochester |
NY |
For-profit |
648 |
Keller Graduate School of Management |
Downers Grove |
IL |
For-profit |
629 |
WyoTech |
West Sacramento |
CA |
Private, nonprofit* |
628 |
Heald College |
Portland |
OR |
For-profit |
618 |
Everest College |
San Bernardino |
CA |
For-profit |
612 |
Everest College |
Reseda |
CA |
For-profit |
601 |
Brooks Institute |
Ventura |
CA |
For-profit |
588 |
Altierus Career College |
Tacoma |
WA |
Private, nonprofit* |
581 |
Everest College |
Ontario |
CA |
Private, nonprofit* |
570 |
Everest University |
Tampa |
FL |
For-profit |
568 |
Everest College |
Ontario |
CA |
For-profit |
567 |
American InterContinental University |
Schaumburg |
IL |
For-profit |
559 |
Everest College |
Renton |
WA |
Private, nonprofit* |
553 |
Altierus Career College |
Henderson |
NV |
Private, nonprofit* |
547 |
Globe University |
Woodbury |
MN |
For-profit |
540 |
Everest College |
Skokie |
IL |
Private, nonprofit* |
539 |
Altierus Career Education |
Austin |
TX |
Private, nonprofit* |
533 |
Westwood College – Los Angeles |
Los Angeles |
CA |
For-profit |
501 |
*Formerly part of Corinthian Colleges Inc, now claiming nonprofit status while operating as a covert for-profit school.
**Formerly part of for-profit Kaplan University, now operated under the Purdue umbrella in partnership with the for-profit former owner of Kaplan.
Source: Department of Education response to the Office of Senator Patty Murray.
|
Never More Urgent
The number of borrower defense claims keeps increasing, and there remains a pattern: for-profit schools continue to lead in borrower defense claims, especially those institutions who closed suddenly and without warning. Unfortunately, the Department of Education’s intention to rewrite the borrower defense regulation will likely do little to improve school behavior and lessen the need for relief: If the final regulation looks anything like the rule proposed by the department, then it will do far less than current law in providing relief for borrowers and holding schools accountable.
Tags: student debt, for-profit colleges, loan relief, borrower defense, for profit
For-Profit Colleges Continue to Generate Most Loan Relief Claims
Thousands of student borrowers are awaiting relief from federal students loans they say were obtained through fraudulent and misleading actions by the colleges and universities they trusted with their educations. This week, Senator Patty Murray (D-WA) released new Education Department data on these 158,000 outstanding “borrower defense” claims for loan relief, data she obtained from department responses to questions for the record following a hearing in March. The data released includes up-to-date information on which colleges have had borrower defense claims made against them. As the newly released data further confirms, most claims come from students who attended for-profit institutions; in fact, the top twenty college operators generating claims are all for-profit companies or were for-profits in their recent history.
Borrower Defense Regulations and the DeVos Education Department
The Obama administration first introduced the current borrower defense rules in 2016, intending to improve and clarify the process for students to obtain loan relief if they were defrauded by an institution. However, a month before the Obama rules were set to take effect in July of 2017, the DeVos Education Department delayed their implementation and announced its plans to revise them. Courts eventually deemed the delay illegal, and the Department of Education was ordered to implement the current rule even as it attempts to rewrite the regulation. If finalized by November 1, 2019, the newly rewritten rules will take effect in mid-2020. In the meantime, despite the Obama-era regulations still being in effect, the department continues to defy court orders that require the rightful discharging of loans to borrowers.
Since the beginning of the Trump administration and DeVos’s secretaryship, the Department of Education’s refusal to discharge has allowed the number of pending borrower defense claims to reach 158,000. All the while, the department has stalled and dissembled, claiming that its staff’s hands are tied on the matter.
The data released this week by Senator Murray, which is summarized in Figure 1 below, provides updated information on a known trend—namely, that for-profit colleges are leading causes of borrower defense claims. In 2017, The Century Foundation published data on the schools generating the most borrower defense complaints (updated March, 2018), finding that the for-profit sector is still responsible for over 98 percent of complaints. The newly released data confirms that pattern: the top twenty college operators with the highest numbers of student borrower defense complaints are all for-profit conglomerates or nonprofit conversions (see Figure 1).
Figure 1
Note: The number of pending applications for each school are not provided due to a risk of an inadvertent privacy disclosure resulting from small cell sizes.
Source: Department of Education response to the Office of Senator Patty Murray.
The school groups with the greatest increase in numbers of claims since TCF’s March 2018 update were Corinthian Colleges and ITT, two schools that had collapsed in 2015 and 2016, respectively. Education Corporation of America, which operated Virginia College and other for-profit chains that collapsed last year, also generated a huge spike in borrower defense claims, suggesting that in the run-up to its precipitous closure, ECA was misleading students in addition to mismanaging its finances.
Moreover, a deeper dive into Department of Education data released by Senator Murray shows that all of the forty-seven schools that had 500 or more pending borrower defense applications at that time were for-profit or were recently for-profit companies (covert for-profit schools) (see Figure 2).
Figure 2
*Formerly part of Corinthian Colleges Inc, now claiming nonprofit status while operating as a covert for-profit school.
**Formerly part of for-profit Kaplan University, now operated under the Purdue umbrella in partnership with the for-profit former owner of Kaplan.
Source: Department of Education response to the Office of Senator Patty Murray.
Never More Urgent
The number of borrower defense claims keeps increasing, and there remains a pattern: for-profit schools continue to lead in borrower defense claims, especially those institutions who closed suddenly and without warning. Unfortunately, the Department of Education’s intention to rewrite the borrower defense regulation will likely do little to improve school behavior and lessen the need for relief: If the final regulation looks anything like the rule proposed by the department, then it will do far less than current law in providing relief for borrowers and holding schools accountable.
Tags: student debt, for-profit colleges, loan relief, borrower defense, for profit