Biden administration makes it easier for borrowers misled by for-profit colleges

[BumRushDaShow]

Source: CNN Politics

Washington CNN — The Biden administration is making it a little easier for borrowers who were misled by their for-profit college to apply for student loan forgiveness. This comes as the president’s broader, separate plan to cancel up to $20,000 in student debt is held up in the courts.

The Department of Education launched a new webpage this week, providing clearer instructions for people seeking debt forgiveness under a program called borrower defense to repayment.

Borrowers who have been misled by their college have long had the right to request loan forgiveness, but the application process wasn’t clearly established until the Obama administration. Now, the department’s Federal Student Aid office is offering more comprehensive information about how to apply.

“The new borrower defense webpage is filled with guiding language and tips to help borrowers successfully complete their applications and get the loan relief to which they are entitled,” said Richard Cordray, Federal Student Aid’s chief operating officer, in a statement sent to CNN. “For all those who lost time, money, and the promise of an education, we will continue to work to make them whole,” Cordray added.

Read more: https://www.cnn.com/2023/02/03/politics/student-loan-forgiveness-borrower-defense/index.html

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Full headline: First on CNN: Biden administration makes it easier for borrowers misled by for-profit colleges to apply for student loan forgiveness

Here is the linked page describing this program - https://studentaid.gov/manage-loans/forgiveness-cancellation/borrower-defense

[ToxMarz]

1. Question: Do they take the money back from the colleges or is there no consequence to them?

[BumRushDaShow]

6. I think it has been a case by case basis - Some (at least ITT) were sued by the FEC for fraud

and the eventual settlement consisted of this -

Top ITT executives agree to fines, ban from top corporate jobs in SEC settlement
James Briggs

IndyStar

Published 7:28 p.pm. ET July 9, 2018 | Updated 8:06 p.m. July 9, 2018

The top executives of the defunct Carmel company that operated ITT Technical Institute have settled fraud charges with the Securities and Exchange Commission.

Former CEO Kevin Modany will pay $200,000 and former Chief Financial Officer Daniel Fitzpatrick will pay $100,000 to resolve allegations that they concealed ITT Educational Services' worsening financial condition from investors in the years leading up to the company's collapse.

The SEC alleged Modany and Fitzpatrick failed to disclose that ITT was on the hook for mounting student loans that the company had guaranteed. The company's stock price fell by two-thirds in 2014 as ITT revealed tens of millions of dollars in losses on those loans, according to the SEC. Neither Modany nor Fitzpatrick admitted wrongdoing, but they agreed to penalties and a five-year ban on serving as officers or directors of public companies.

The former executives settled their cases ahead of a trial that was scheduled to start Monday. Modany said he was unavailable to comment. Fredric Firestone, an attorney representing Fitzpatrick, said his client is "pleased to put this matter behind him." For Modany, the settlement with the SEC resolves one legal matter as another escalates.

(snip)

https://www.indystar.com/story/money/2018/07/09/top-itt-executives-kevin-modany-daniel-fitzpatrick-settle-sec-charges/769582002/

For ITT, this past August, Biden had announced discharges of loans associated with them and this article also mentions some other places - https://www.cbsnews.com/news/itt-technical-institute-department-of-education-forgives-3-9-billion-student-loan-corinthian-colleges-devry-university/

AND multiple states also sued the same org for hundreds of millions.

I don't know all the institutions involved so some digging might reveal which other ones the SEC went after and what happened. It was sad that from 2017 to early 2021 before Biden was inaugurated, it was such a fiasco and the outcomes of what had been underway before that 2016 election, were missed due to the morbid media circus we were subjected to, let alone a pandemic.

[ToxMarz]

8. I feel that part of the agreement that allows them to receive

Federal Govt backed student loan money should require they immediately forfeit the funds if they are forgiven to the borrower because of fraud (or whatever other reason). If they think they are entitled to keep it, let them have to file suit to establish that rather the Govt having to sue to get it back.

[JI7]

2. Are the fake colleges punished in any way ?

[BumRushDaShow]

7. See above

https://www.democraticunderground.com/?com=view_post&forum=1014&pid=3028837

From what I could dig up of a couple known ones, yes.

[Backseat Driver]

3. Fat chance for those attending a renown state university!

Yet, she confidently applied for an entry-level opportunity with the on-campus hotel, The Blackwell, where she also had done an academic "experience" class. Guess she should be grateful that she even got a letter back that TPTB wouldn't even bother to interview their Hospitality MANAGEMENT Bachelor's degreed alumni for the position--because "she wasn't qualified?" Yeah, that hurt at the time.

During her studies she had even worked PT as a server with the food service contracted to feed Coach Jim Tressle and the football team and those in the Shottenstein Center concert event boxes. That was fun as she got to hear some bits and pieces of rock concerts, but it likely from the lowest bidder and low-paid, and definitely not anything on which to build a career...ahhhh, but building that campus culture spirit though!

Water over the damn, I guess, as she later found a pretty good job that is somewhat related to her field, but how sad is that! Dad and kid still working on those school loan rackets.

[twodogsbarking]

4. The Trump University Law.

[Igel]

5. What if it was a public non-profit college that did the misleading? n/t

[ck4829]

9. Kick