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.

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.