Senior student loan consolidation official warns executives about former for-profit colleges



  • FSA Director Richard Cordray has vowed that the heads of the late for-profit organizations will pay the price for wrongdoing student loan consolidation
  • In August, Representative Bobby Scott said students and taxpayers should not have to pay the cost of failing schools.
  • For-profit organizations like ITT Tech and Corinthian have misled students into taking on more debt than they could afford.

In August, House Education president Bobby Scott urged the Department of Education to hold leaders of former for-profit colleges, like Corinthian and ITT Tech, personally accountable for money owed to the federal government – a cost that generally falls on students and taxpayers.

In a hearing last week, Federal Student Aid (FSA) director Richard Cordray directly responded to Scott’s request and said he “absolutely” agree  student loan consolidation”}” data-sheets-userformat=”{“2″:8705,”3”:{“1″:0},”12″:0,”16″:10}”>student loan consolidation

“We agree on this point,” Cordray said. “We totally agree. More needs to be done to prevent people from abusing these student aid programs, from deceiving taxpayers, from deceiving students.”

Cordray was invited to testify before the House Education and Labor Committee last week on his financial aid priorities. by for-profit schools.

During his round of questions, Scott followed up on his August letter, claiming that the Education Department had “failed” to use its authority to hold leaders of institutions that defrauded students financially accountable. , which has left “taxpayers and students alike to pay the price when institutions engage in fraudulent activity.

Cordray recognized Scott’s letter and said, “It was a good kick in the back to make sure we get on the road. And we will.”

Scott cited March testimony from Dan Zibel, chief student defense attorney, who detailed the department’s authority to ensure that executives pay the price for failed for-profit schools. Last year, Student Defense, which advocates for student rights, released a report detailing how these executives can be held accountable under the Higher Education Act.

Not only do deceased for-profit organizations curtail students’ studies, they can often impose a heavy debt burden on these students that is often difficult to repay. A slew of for-profit colleges have closed in recent years over accusations of fraud, mismanagement, and misleading students into taking on student debt they can’t pay off, and although A student loan forgiveness program exists to forgive student debt for borrower fraudsters, under the policy of Education Secretary Betsy DeVos, the program increased a denial rate of 99.4%.

That’s why Education Secretary Miguel Cardona has reversed that policy to start giving borrowers scammed by for-profit schools the relief they’re entitled to and has set aside about $ 2.6 billion for them. borrowers defrauded by for-profit schools.

Yet lawmakers believe that the institutions that forced borrowers to take on more debt than they could afford are not facing adequate consequences. House Appropriations Speaker Rosa DeLauro wrote a letter to Cardona last month, saying defunct for-profit companies should be fined “commensurate with the scale of misrepresentation and wrongdoing committed by the institution “.

In October 2020, Massachusetts Senator Elizabeth Warren led five of her fellow Democrats to push for the department to use every legal tool at its disposal to hold the leaders of for-profit organizations that “defrauded students personally, financially responsible ”.

Lawmakers wrote that the department’s failure to enforce accountability “has also encouraged future breaches by executives who believe they can enrich themselves at the expense of students and taxpayers without consequence.”


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