Predatory Lending/For Profit Colleges Need To Be Stopped

Source: Financial Solutions

Over the past few years, stories have been emerging which portray 'for profit' colleges who encourage students to sign up for student loans and then provide a substandard education.  Which results in fraudulent use of student loans.  The Obama Administration tried to combat these colleges from scamming students out of financial aid in light of providing a fraudulent education.  This week reporting from Politico Education unveiled a deadline for the Trump Administration to either uphold or change the Obama Administration's regulation as shown below:

KEY DEADLINE TODAY FOR 'BORROWER DEFENSE' RULES: A federal judge's ruling that struck down the Trump administration's delay of Obama-era student loan regulations known as "borrower defense to repayment" is set to take effect at 5 p.m. today. But the Trump administration hasn't yet said how it plans to respond to that deadline — or whether it plans to move ahead with implementing the 2016 regulations.

— The rules govern loan forgiveness for defrauded students and prohibit colleges from requiring students to resolve disputes through arbitration rather than in court.

— Education Secretary Betsy DeVos has criticized the rules as unfair to colleges and too expensive for taxpayers and has moved to rewrite them. But it's now possible that her agency could be forced to carry out the Obama-era policies in the meantime.

— All eyes are on a potential decision from U.S. District Judge Randolph Moss, who set today's deadline and is also overseeing a bid by for-profit colleges to stop the Obama-era rules from taking effect. Moss expressed skepticism about whether the for-profit colleges had met the standard needed for him to issue a preliminary injunction against the rules, but it's possible he could block some provisions while allowing others to take effect.

— The Education Department has not announced plans to seek a further postponement of the Obama-era regulations. The department did not respond to requests for comment on whether it planned to implement the rules or otherwise provide guidance to colleges.

Why isn't the Consumer Financial Protection Bureau investigating and taking action against such fraudulent institutions?  One has to wonder why these institutions are supported or allowed to continuously defraud students out of loan money.  According to ABC7 News, the problem is widespread here in California:

California Attorney General Xavier Becerra had strong words for Education Secretary Betsy DeVos in his fight for student debt relief.

"We have seen her turn back the clock and we have seen her turn her back on our students," said Becerra.

Becerra announced California and seven other states will support a lawsuit against DeVos, alleging students are being denied debt relief after being defrauded by Corinthian Colleges.

"Companies loaded up these students with debts they knew never could be repaid with the ultimate goal of driving large bonuses to executives and profits to shareholders," said Seth Fotman, from the Consumer Financial Protection Bureau.

The now-defunct, for-profit Corinthian Colleges and its subsidiaries left thousands of students with major debt.

The Obama administration reached a deal to provide full relief, but under the new administration, only partial refunds are being granted.

"You borrow $40,000, which isn't uncommon, they're telling you maybe you'll get $4,000 of that $40,000 relieved," said Becerra.

Becerra said more than 50,000 students are still waiting on their claims. He said more than 8,000 claims were denied between December and May.

Remember that a portion of these unfortunate students are veterans who are returning to school and using their 'G.I. bill' to pay for these fraudulent loans.  This in of itself should be a crime which is prosecuted in a court of law.  Defrauding veterans is a federal crime.   Additionally, 50K (50,000) students is no small amount.  Again, why did the government or local officials allow these institutions to continuously engage in fraudulent behavior.



The Department of Education owes the students who have been defrauded the courtesy of dealing with this unethical behavior.  Hopefully, the Trump Administration stands up to these fraudulent institutions and deals with the negative outcomes which have been produced as a result of their actions.  Keep an eye out on the emerging story in the months to come.