Thursday, March 16, 2023

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

The Higher Education Inquirer has posted a number of articles about student loan debt. In 2023, the student loan mess has reached epic proportions. Not only has the US Federal Student Aid debt portfolio reached more than $1.6 Trillion, we learned that $674 Billion was estimated to be unrecoverable. 

In California, the US District Court in Sweet v Cardona agreed to a $6 Billion settlement between student debtors and the US Department of Education. 

In Texas, a group representing for-profit colleges has sued the US Department of Education for their actions in settling Borrower Defense claims. 

And across the US, about 40 million student debtors and their families are awaiting a decision from the US Supreme Court—a decision that will not likely favor the debtors.

Borrower Defense, Subprime Colleges, Subprime Programs

Borrower Defense to Repayment claims are claims by student loan debtors that their school misled them or engaged in other misconduct in violation of certain state laws. The Department of Education may discharge all or some of the student loan debt and hold the school and its owners responsible. 

As of January 2023, there are more than three quarters of a million Borrower Defense claims against schools. And each month, about 16,000 new claims are added.  Evidence from the Sweet v Cardona case revealed that only about 35 workers were responsible for processing hundreds of thousands of claims. Those claims have been disproportionately made against a number of for-profit colleges and formerly for-profit colleges, what we call “subprime colleges.”   

Some of these subprime schools have closed (Everest College, ITT Tech, and Westwood College for example), some remain in business as for-profit colleges (like University of Phoenix and Colorado Tech), some have changed names and become covert for-profit colleges or robocolleges (like Purdue University Global, University of Arizona Global Campus, and the Art Institutes), and some schools act act like subprime colleges regardless of tax status. This includes low-return on investment programs at several US robocolleges and overly expensive graduate programs offered by 2U, an online program manager for elite colleges.  

In the Sweet v Cardona case, more than 200,000 student borrowers are expecting to receive full debt relief after years of struggling.  A Facebook group Borrower Defense-Sweet vs. Cardona currently has more than 14,000 members. 

Named plaintiffs Theresa Sweet (L) and Alicia Davis (R) outside the federal district court in San Francisco on November 6, 2022, three days before the final approval hearing in Sweet v Cardona (Image credit: Ashley Pizzuti)

Transparency and Accountability 

The US Department of Education keeps an accounting of Borrower Defense claims, but only publishes the aggregate numbers, not institutional numbers. Those institutional numbers do make a difference in promoting transparency and accountability for the largest bad actors. So why does the Department of Education not publish those institutional numbers?
The National Student Legal Defense Network submitted a FOIA (22-01683F) to the US Department of Education (ED) in January 2022 asking just for that information. And what HEI has discovered is that just a small number of schools garnered the lion's share of the Borrower Defense claims. To get a digital copy of that information, please email us for a free download.

Related links:

Borrower Defense-Sweet vs Cardona (Facebook private group)  

Project on Predatory Student Lending

Sweet v. Cardona Victory (Matter of Life and Debt podcast)

I Went on Strike to Cancel My Student Debt and Won. Every Debtor Deserves the Same. (Ann Bowers)

An Email of Concern to the People of Arkansas about the University of Phoenix (Tarah Gramza)

The Growth of "RoboColleges" and "Robostudents"


Bryan Alexander said...

You'd think publishing the names of individual institutions would align with the Obama administration's scorecard idea.

Anonymous said...

The fact that their is no transparency or accountability in naming the for-profit predatory colleges that have literally wiped out generations of young people through fraud and misrepresentation, not to mention theft, shows that allegiance between for profit colleges and the Government.

We know that when the government and the corporations work together to hide, obfuscate and otherwise deceive the taxpayers and students --- taxpayers pick up tab for bad and illegal loans -- that this alliance, known as "a public-private partnership", whereby the profits got to criminal colleges and the 'public service' becomes untenable debt, that this is fascism.

Obama was elected in my judgment to privatize all education and it is no wonder than under his mis-administration privatization, charter schools, for-profit predatory colleges soared to heights never seen before.

Remember that it was Biden who assured no debts for education could be discharged in bankruptcy. This is his legacy, that and war.

Bailouts for banks. No problem. Bailouts for industry. No problem. Billions for the military and over $100 billion for Ukraine.
No problem. Bailouts for students suffering from usury? Sorry. Join the 'gig' economy.

Students in debt must understand that this is all part and parcel of finance capitalism.

Alas, it is not just students who stride debt they can never pay, the US now owes $31 trillion dollars in debt with GDP yearly of only $21 trillion.

It is China that holds $2 trillion of US debt and this and debt held by Japan is floating the system.

The fight against predatory colleges is the fight against capitalism and the coin operated politicians who man the Titanic.

The public commons has been privatized and to take it back there must be united, across the board coalition of teachers, workers, students and the unemployed in a fight for socialism.

You cannot regulate a criminal enterprise and this is what capitalism is.

All over the world capitalism is failing and US hegemony is dying.

We either unite and fight, or we live in peonage with no work for the remainder of our lies.

The students who won the lawsuit will find that massive organizing is necessary in a country as corrupt as the US.

Anonymous said...

Bryan, I'm trying to figure out how we can do this as a monthly report posted publicly.

Anonymous said...

You are so right about this. Let's hope those student debtors can use this success to embolden others, just as the UC workers did in December.