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Betsy DeVos is forcing scammed students to repay loans for meaningless degrees

What will happen to students defrauded by for-profit colleges? The Department of Education revealed it is no longer forgiving loans for scammed students under an Obama-era program.

by Christina Sterbenz
Dec 12 2017, 12:30pm

Every year, students concede to the rising cost of college tuition in hopes they’ll land a big enough salary after graduation to pay off whatever debt they incurred along the way. But that dream dissolved for thousands of students when Corinthian Colleges and other fraudulent for-profit colleges suddenly collapsed in 2015.

Those students, however, still have to pay their loans back, the Department of Education’s independent Office of the Inspector General affirmed in a report on Monday. Without making a formal announcement, the department under Betsy DeVos stopped canceling defrauded students’ debt under an Obama-era forgiveness program, leaving them in financial limbo.

Corinthian closed in 2015 after a series of federal investigations and fines revealed their shady practices, which included lying to students about job placement rates, and predatory lending. The next year, a similar fate befell ITT Technical Institute. In both cases, thousands of students showed up for class one day to find the doors locked. And when ITT Tech closed, the school also lost its education accreditation, leaving students with meaningless degrees and little hope of paying off their mounting debt. In just one settlement reached after Corinthian’s closure, for example, a lending firm that helped the for-profit with its scams paid $183 million to over 40,000 students.

Months after Corinthian’s closure, President Obama unveiled a loan forgiveness program for students who could prove that their college had scammed them. But ever since taking office, DeVos has dragged her feet approving the backlog of claims under the program she had long considered cutting entirely. But it was unclear whether she would just delay students’ claims or deny them altogether.

By stopping loan cancellations entirely, DeVos will now have a chance to review the process and even approve some individual claims. But the decision also leaves thousands of defrauded students unsure whether they should pay their debt, including interest, or seek other avenues of forgiveness. In fact, some now face more debt than if they'd just paid their loans from the start, according to the inspector general’s report. The Department of Education did not immediately respond to request for comment.

The move is the latest effort from Republicans and the Trump administration to slacken oversight on for-profit colleges, known to take advantage of students, especially veterans. Republicans have repeatedly claimed the sector is overregulated, and just last week, they introduced a bill in the House that would significantly overhaul the Higher Education Act of 1965. The proposed changes would eliminate several significant programs aimed at helping struggling students and holding for-profits accountable to provide them with a worthwhile education.