In the past few years, for-profit colleges have come under increasing scrutiny for preying on students. These institutions have been accused of touting misleading or inaccurate job placement rates, using questionable recruitment practices, misrepresenting their educational benefits, and giving inaccurate information about accreditation.
Government officials are starting to see through the scams. For example, one Corinthian Colleges graduate who ended up working at Taco Bell was counted as having a job in her field of study, which was accounting. After investigations by the U.S. Department of Education revealed that those job placement rates were indeed misleading, the company was fined $30 million by the department. In April, Corinthian shut down its remaining campuses.
For-profit colleges tend to target low-income students, many of whom are the first in their family to attend college and don’t always have the context to determine whether financial aid practices and recruitment efforts may be fishy. Then, since these colleges often provide graduates with few career prospects, many for-profit college graduates struggle to find jobs that provide enough income to pay off their student loans.
If, after reading the stories from these graduates, you’re worried that you could be one of the students who’s been defrauded by for-profit colleges, here’s what you need to know.
Ask yourself some hard questions
You may be attending a for-profit college now, but are unsure whether it is defrauding students — or you may have already graduated, but are just beginning to wonder whether your college employed questionable practices. Begin by asking yourself some of these questions:
— Was the college very aggressive in sending you mail and calling you after you attended an open house? Did they pressure you to enroll, arguing things like, “If you don’t do it now, you may never do it”?
— When you said you were unsure of how to pay for it, did they say they would “crunch some numbers” to make it work and insist that everything would be fine?
— Did they ask you very few questions and allow you to complete a very informal and easy application process?
— Did the attention you received from support staff drop off immediately after you enrolled in school? Were staff extremely difficult to reach? Did you struggle to find them even after emailing, calling, and visiting every day for a month?
— Do you have records showing they misrepresented the amount of loans you were taking out, or do your college expenses look inconsistent in a way you find suspicious?
— Is your college on the U.S. Department of Education’s heightened cash monitoring list? Has your college been investigated by the Consumer Financial Protection Bureau, the U.S. Department of Education, U.S. Department of Justice or attorneys general?
— Are you unable to transfer any of your credits?
— Does your college have an extremely low student debt repayment rate?
— Did your college push graduates to apply for positions that did not require any special training or degree whatsoever?
— If you were fortunate enough to find a job in the area you studied for, did you find that the college failed to prepare you for the work because it did not include training on standard tools the industry uses?
If you answered “yes” to the many of these questions, you have a lot in common with the experiences of students who have attended the for-profit colleges that have been investigated the government for suspicious practices.
That doesn’t necessarily mean you were personally defrauded — or that you can easily prove you were defrauded — but it does mean your college’s conduct has some serious red flags. You may want to consider doing more research and getting in touch with graduates of the same college who may have similar experiences. Until former students and graduates of Corinthian Colleges schools met with each other and recounted their stories, some graduates weren’t aware how “eerily similar” their stories would be.
You can find a comprehensive review of characteristics of for-profit colleges that may be harmful, along with specific reviews of each college’s conduct, in this 2012 U.S. Senate Health Education Labor and Pensions Committee report on the for-profit college industry.
Gather evidence about your school
It’s important that you keep records of your time at the college — including documents you signed while you attended classes, emails you exchanged with administrative staff and professors, your assignments and class exercises, and especially your financial records.
For-profit colleges have been known to lose or get rid of important documents once students graduate, saying the records go too “far back.” So if you’re still attending college, make sure you keep everything, and if you’ve already graduated, make sure you organize the records that are available to you. It can be very difficult to get documents after requesting them from the college unless you make it clear that you will bring their refusal of records to the attention of the U.S. Department of Education.
Students should scan all hard copies of documents and keep all records back up on a flash drive or external hard drive. Here is a list of records to keep track of:
— Emails to and from anyone at the school
— Folder or documents received prior to enrollment such as graduation data, job placement rates, and the course catalog
– Any housing documents, including application, lease, receipts for rent and deposits, and any charges for damages
— Enrollment agreement
— Financial aid forecast or expected aid
— Signed receipts for any student refund checks
— Master Promissory Notes
— Receipts for anything paid out of pocket, including tuition, books, supplies, etc.
— Unofficial or official transcript
— Copies of your financial ledger, academic file, financial aid file, administrative file, and anything else the school has with your name on it
— Any documents that mention disputes with the school and your legal rights as a student, such as an arbitration clause
In order to prove fraud, you’ll need your enrollment agreement, transcript, housing documents, a breakdown of loans from the National Student Loan Data System, and your financial ledger.
Try to prove you were scammed
If you’re able to collect all of the evidence that proves you were defrauded by your college, you may be able to apply for something called “borrower defense to repayment.” The borrower defense to repayment applies to borrowers who have taken out Direct Loans from the federal government and allows former students and graduates to make a claim that they were defrauded by their college, regardless of whether the college closed, which will hopefully result in student loan forgiveness and reimbursement of payments already made.
The process for borrower defense to repayment, which applies only to the Direct Loan program, is still in flux. The provision has existed since 1994, but the department did not begin the process of figuring out how to determine eligibility until very recently, when former for-profit college students and student debt activists began asking questions.
The department chose an outside expert or “special master,” Joseph Smith, to begin answering these questions. Smith has released reports every couple of months detailing the progress that has been made on determining eligibility. The latest report was released earlier this month.
Students who attended Corinthian Colleges now have the best luck of seeing their debt erased, since they have filed the majority of the claims and the department has acknowledged that the company defrauded students through misleading job placement rates.
The department has announced it will erase the debt of 7,000 students who attended Corinthian Colleges schools; it will also erase debt for 1,300 additional students who attended Heald College, which is a college owned by Corinthian Colleges. Of course, many more graduates of the college chain could benefit from the cancellation of their student debt. If all students who took out federal loans since 2010 had their debt canceled, it would amount to $3.2 billion.
Art Institute graduates face more obstacles to proving they were defrauded. Two recent settlements have been made, one with the U.S. Department of Justice and another with several attorneys general, that make it difficult for the Department of Education to further investigate the company. As part of the settlements, the company also refused to admit wrongdoing. That isn’t to say it’s impossible for AI students to eventually receive debt relief — only that the settlements make their efforts that much more challenging.
Another option, which is available to those who attended Corinthian while the colleges were closing or the college closed soon after you withdrew from the college, is a closed school loan discharge or the ability to transfer credits to another university. There is also the option to request loan forbearance as you wait to find out whether or not any of your requests, such as borrower defense to repayment or a closed school loan discharge, are available.
To find out more about the borrower defense to repayment process, read the U.S. Department of Education’s guide.
Steer clear of debt forgiveness scams
If, like many for-profit college graduates, you’re struggling to pay your bills, much less make payments on your student loans, you may run across student debt forgiveness or income repayment plan scams near the top of your Google search results.
These scams ask students with federal loans to pay anywhere from $500 to $2,500 to submit an application for an income-based repayment plan or for defense to borrower repayment. Scammers try to sell borrowers on the idea that the process is way too complicated for any borrower to attempt on their own. The offers also claim they can reduce your student loan payments by a certain percentage even though they have never seen your personal financial information.
In fact, you don’t need to pay for services to submit applications for either of these options. Although the process could be streamlined and student loan servicers could do a much better job of communicating with borrowers, it’s actually fairly straightforward to figure out. Few graduates are aware of them or take advantage of them because student loan servicers do such a poor job of explaining debt repayment options. Check out some of these guides for more information on how to apply for income-based repayment plans.
Get involved with local activists
As you struggle to pay bills, find a job, and figure out how to handle your student loan debt, activism may seem futile.
But the past two years of student debt activism has shown the opposite is true. For-profit college graduates are playing a major role in larger activist groups like the Debt Collective and the Million Student March. And those students are proving that activism can draw attention to problems with how the federal government monitors and investigates for-profit colleges.
Last fall, the Debt Collective highlighted Corinthian students’ debt by canceling almost $4 million in student debt through spending $100,000 to purchase student loan debt owed to Corinthian and then voiding the loans. Methods like this drew media attention to the problems graduates and former students of Corinthian Colleges are facing.
Soon, media attention shifted to U.S. Department of Education’s inability to hold for-profit colleges accountable for their fraudulent practices, and student debt protests became more visible to the media. The Million Student March, which organized marches throughout the country last month, originated among a few students in Boston and quickly spread to major cities from New York to Seattle. The protests were eventually covered in major publications such as The Wall Street Journal and The Washington Post, and activists were invited to speak as guests on national television programs.
There are several advantages to getting involved in activism as opposed to investigating on your own. Once you’re aware of others who are going through the same challenges, you’ll probably be less likely to blame yourself for the amount of student debt you took on. Plus, when activists work together, they can pool their resources and knowledge. For example, a former student of an EDMC college, Jo Kirby, has some experience analyzing financial documents and now plays the role of checking out student loan records and bills from for-profit colleges to see if there are any inconsistencies.
Most importantly, though, graduates and former students who have time to spare will likely feel more satisfaction from speaking out against predatory colleges than simply waiting for the federal government to do something. After all, if Corinthian students hadn’t pressured the department to take action, who knows how long that would have taken?