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Student Loan Fraud: Growing Numbers Cite For-Profit Schools at Fault

student loans
  • Dec 26 2017

For many students about to exit high school, there is no question about attending college. It is the next step in life, an expected leap in independence, and the stepping stone to starting a career and entering adult life. This process is expensive, and were most required to pay in cash it simply would not happen. Today, even with the student loan debt creeping up past $1.3 trillion, most students still expect to lean on either federal or private loans to get through a varying number of years which sometimes include graduate studies too.

Some graduates go out into the work force and can live with forking over the monthly payments established by their student loan servicers, eventually paying off the debt. But for so many, financial strife ensues—and especially if they leave school without the tools they were promised to succeed. As loans become so cumbersome for so many, the pressure is even greater to see some of them discharged in bankruptcies because of undue hardship, or forgiven altogether.

Fraud due to empty promises is one reason forgiveness is sought for many student loans, with a recent news article stating that the majority of these cases filed are by borrowers who attended for-profit learning institutions. Analysis by the Century Foundation of recent Education Department data showed that there was found “a disproportionate concentration of predatory behavior among for-profit colleges” that raises “serious concerns about the federal government’s current approach to providing relief to students who have been defrauded and misled.”

Only 1.4 percent of complaints, out of 98,800 received by the Education Department, were filed against learning institutions operating under non-profit status. Data also showed the following:

  • 75,000 claims of fraud were made against the Corinthian schools (now closed)
  • 7,300 claims were against ITT Technical Institute
  • Other claims named American Career Institute, The Education Management Corps., and more

“The for-profit college industry scams students across the country and taxpayers, and that’s why the industry — including industry insiders who are now staffing the Department of Education — is now fighting so hard against rules that would clarify the borrower defense process,” said Toby Merrill, director of the Project on Predatory Student Lending at Harvard. “If for-profit schools don’t want to be responsible for borrower defense claims and reimbursing taxpayers, then they could simply not cheat their students.”

While others in the industry may try to discredit such data, Tariq Habash is one of the authors of the study released by Century, and he stands by the information, further explaining that for-profit institutions are always more interested in turning a profit.

“This highlights a clear difference between for-profits and nonprofits. It’s not just the tax statuses. It’s the control structure that governs these entities,” said Habash.

If you are currently delinquent or worried about defaulting on your student loans, contact Fitzgerald & Campbell, APLC now so one of our experienced student loan debt attorneys can review your case and discuss all the available options with you.

Our attorneys have decades of experience in serving clients as they navigate through challenging financial situations, to include student loan issues, bankruptcy and other debt management processes. Let us review your case and discuss what would work best for you. We are here to help! Call us today for a free consultation at (855) 709-5788, or email us at info@debtorprotectors.com.

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Posted in: Student Loan Debt