AG Jepsen Joins Multistate Effort Supporting Victims of Predatory For-profit Schools
Eleven state attorneys general advocate for ease and clarity
for students seeking to discharge loans after being victimized
Attorney General George Jepsen today joined with 10 fellow attorneys general from around the country in calling on the U.S. Department of Education to cancel federal student loans in cases where Corinthian Colleges and other for-profit colleges and universities have broken state law, including laws prohibiting unfair and deceptive sales practices, and to provide clear processes for students seeking relief.
In a letter sent to U.S. Secretary of Education Arne Duncan and recently appointed Special Master Joseph Smith – who has been charged with reviewing the debts of students who attended Corinthian schools and establishing procedures for discharging their student loan debts – the attorneys general ask that they be included in the planning process, that students not be subjected to a burdensome or onerous process and that clarity be brought to the process to ensure that victims are not left with debts stemming from unfair and illegal practices.
"Students in Connecticut and across the country – including many military veterans – are coping with high student loan debts that they incurred after aggressive sales tactics and deceptive marketing practices that exploited their hopes and dreams of achieving a quality education," said Attorney General Jepsen. "While I commend the Department of Education for taking steps toward providing relief to students who were victimized by these schools and their unfair tactics, it is important that additional burdens not be placed on students who are already struggling. Attorneys general are well-equipped to offer evidence of illegal practices and to support students through the loan discharge process. It is my sincere hope that the department will heed the advice my colleagues and I have offered and will take our concerns seriously as it moves forward with relief efforts for these deserving students."
The letter raises a number of concerns about the Department of Education's state law discharge process and offers several recommendations, including:
• Easing the burden on students to achieve relief: Borrowers should have a clear process for applying for a discharge of their state loans based on violations of state law. Students should not be held to a difficult burden in proving that they were deceptively induced to enroll or that the school engaged in other unlawful acts. While many consumers have been victimized by for-profit schools, they are often in a poor position to prove that the schools committed unfair or deceptive practices.
• Allowing attorneys general to make showings of state law violations: As part of the review process, the department should invite interested attorneys general to provide supporting materials regarding unfair and deceptive practices. Attorneys General, who are experienced in investigating trade practice violations and have access to substantial information about for-profit college abuse, are typically better equipped to demonstrate schools' unfair or deceptive practices than individual students.
• Discharging loans of groups: Provide a mechanism by which the loans of entire cohorts of students may be discharged. The department should accept findings or evidence from government entities on behalf of the students.
• Ensuring relief regardless of loan status: The department should clearly state that discharges are available for Direct loans, Federal Family Education Loan Program (FFELP) loans, PLUS program loans and loans that have been consolidated into new debt. The department should also make clear that students may recover amounts already paid on Title IV loans.
Additionally, the attorneys general asked the department to ensure immediate relief to Corinthian borrowers and to address eligibility problems concerning the implementation of the closed school discharge program as it relates to Corinthian loans.
In April, a group of nine attorneys general – including Attorney General Jepsen – sent a letter to Secretary Duncan expressing the importance of defense to repayment for student borrowers at for-profit schools that have broken state law. In June, the department announced its new debt relief process for Corinthian students and, later that month, announced the appointment of Joseph Smith as Special Master.
In addition to Connecticut, and led by the Massachusetts attorney general, today's letter was signed by the attorneys general of California, Illinois, Kentucky, Maryland, New Mexico, New York, Oregon, Pennsylvania and Washington.
Assistant Attorney General Joseph Chambers is assisting the Attorney General with this matter.