February 26, 2023.
Hi! My name is Tarah Gramza. Dahn Shaulis has
been talking with me about the University of Phoenix/University of Arkansas situation. I offered
to share my knowledge as I have quite a bit with years of experience in this
mess of subprime colleges and student loan debt.
I am the creator/administrator of
a quite popular Facebook group with approximately 14,000 members. Theresa Sweet and I came together by sheer accident and became close friends. We have managed this group
together for a few years now.
Theresa started her battle with the US Department of Education (aka ED) nearly a decade ago trying to get anyone’s
attention to hear her story and draw attention to the fraud being committed by
these schools right under everyone’s noses. Our stories are all similar: we
attended schools who promised a future full of butterflies and roses, misled
quality of education, pressured enrollment, false advertised job placement,
lied about costs...the list goes on.
Following
the bread crumbs
Our lawsuit started as a mission to
hold the Department of Education accountable for delaying the processing of Borrower Defense to Repayment applications. These delaying actions broke ED's own rules and regulations. The last
several administrations tried to change rules for their own agendas and to satisfy
their paid cronies. We know for a fact many congressional leaders have been
deeply invested and made millions from this for-profit schools fraud. This
includes the Secretary of Education at the time, Betsy DeVos.
The first settlement forced ED to process applications fairly within a period of time. The
department made a big mistake, they decided to deny 90% of class members
applications and used illegal denial letters, which ultimately stopped the
settlement and sent us back to litigation/discovery. During the discovery it
was uncovered that ED had internal emails showing they were
intentionally not reviewing applications per the law requirement (a policy
of mass denial), withheld evidence by the department on many of the
main culprit schools, and knew about the fraud being committed at the
highest levels. This led to additional claims by the class and now opened the
department up for direct financial liability and undue harm. This led to the
final settlement that sits today.
Between the first
settlement and the illegal denials and the present one, the administrations changed and
Betsy DeVos quit her job. During the discovery (testimony) it was found that
upper leadership under Betsy DeVos pointed their fingers directly at
Betsy herself and that she directed these policies, an attempt was made to make
her testify. As government always does, they protected her and their own tails
in the process and she was allowed to skate by unscathed. The new administration
decided it was time to start doing the right thing; the sheet was
pulled back enough for everyone to see they well knew about the fraud for
over a decade.
This lawsuit also brought forward
the fact that ED had not used its own rules to go after schools for
recoupment costs on the taxpayers behalf and recoup funds from these executives,
schools, leaders. This includes some of the leaders of major school collapses
such as Corinthian Colleges and ITT Tech. Sadly, the executives just jumped from one school
to the next bringing their fraud with them along the way, leaving a wake of
schools with damaged students.
Putting
it together
The final settlement (Sweet v
Cardona) was signed and all of a sudden four schools from the list of 151 known
offender schools decided to intervene on the lawsuit. They used every excuse
they could to conjure up to stop this case and hold up the settlement--even though the settlement didn’t hold them accountable for the class
discharged claims. The judge ultimately denied their requests leading a final
settlement approval. Three of those four schools then appealed the judge for a stay,which was officially denied Friday evening.
Why would four schools appeal a lawsuit
that doesn’t involve them of which ultimately has no recoupment against them
for the class?
Well- here’s why, the post class
group AND any following applications will have recoupment. The department,
right around the time of the announcement, had recently announced the
recoupment efforts against Devry University and this terrified the schools.
They knew full well they were next and that it would put them out of business
and these shareholders would be left holding the bag. Now a plan needed to be
put into place to try to find a way out.
The
plan
University of Phoenix is one the
biggest offenders and probably one the largest schools to profit from this
business model of fraud. We’ve seen evidence that much of the fraudulent
activity came directly out of the University of Phoenix training manuals. They also had
some of biggest lawsuits, so intervening as University of Phoenix was a bad idea.
The well-known
school lobbying group Career Education Colleges and Universities (CECU) led by Jason Altmire banded
together to not only bundle money from these subprime schools to stop this lawsuit,
by using these four smaller less widely known, less lawsuits, as pawns in a bigger
game. Jason has been known and deeply ingrained in this scandal for over 20
years, even before he was lobbying. He was an elected official voting for this
for profit game. Holding up the lawsuit benefited every single school named on Exhibit C and you will see why below.
The new rules and regulations were
published a few months back with hard targeted rules that establish a line in
the sand starting July 2023. These regs held harsh consequences for all schools
not only into the future but also for past bad deeds. The rules also clarified
and hardened the rules for information sharing (evidence) and group
discharges.
It became apparent that the shareholders
and owners of University of Phoenix needed out and now. This is because the
recoupment efforts follow owners. If they can sell the school, they can cash
out what is left of their $1 Billion investment and run intact. Which leads to
the point of this email, if Arkansas, or any other buyer decides to buy University of Phoenix
they will be the target for the recoupment efforts which I estimate to be
approximately $600M dollars as it stands today with the number pending
recoupable borrower defense applications. If things go as expected this number
could exceed $1B. The rules call for recoupment of funds and also steep consequences
such as loss of title IV funds.
Jason Altmire and his lobbying group are so desperate to prevent these rules, they are suing in Texas to prevent them from being implemented.
Why would the Governor of Arkansas
pursue this deal?
The Governor of Arkansas knows full
well the risks. The political side of this story is administrations. Republican
administrations have been very friendly to these schools and have in the past
created and changed ED rules in the schools favor and turned a blind eye to the
fraud. Democrats have also been guilty of this but in today’s climate we have
to think of the present state of the Republican position in student debt
relief. The state of Arkansas is offered a sweet deal of a percent of profits
on a private deal which they claim doesn’t cost tax payers.
The hidden agenda
by the governor is she is gambling against a change in administration that is friendlier
and will either not pursue recoupment against a state owned (affiliated) school
OR she is thinking the Biden administration will lose the next election in which they
will push to change the rules again! This is a steep gamble as I suspect the
secrets in this deal don’t offer protections to the state as presented in press
briefings. If the state is signing a contract for profits, what happens if the
school goes under? As you may be aware, much of these warnings have been shared
with the leadership of Arkansas by many student advocate groups including our
lawyers for the Sweet case, the Project on Predatory Student Lending-PPSL.
Recent announcements made by the Department of Education have added an additional layer of risk for anyone purchasing University of Phoenix as ED recently announced it “may require certain individuals to assume personal liability as a condition of allowing the schools they own or operate to participate in the federal financial aid programs and likely to require an individual to assume personal liability on behalf of the institutions or groups of affiliated institutions that pose the largest financial risk to the United States. This is determined based on institutions with the most serious and significant sets of concerns.” The question becomes, who will be putting their personal assets as collateral? University of Phoenix is not only a risk, it is one the primary reasons for the need for additional protections to the tax payers.
What value would the purchase of University of Phoenix have to the state of Arkansas if it can’t have its Title IV renewed? This fact alone combined with the University of Phoenix history, should scare away even the most riskiest investor!
Now you know the big picture. I hope it helps guide
your actions and I hope you are willing to write and share with the public how
this dangerous gamble is being wagered against the people of the state of Arkansas.
For the records, I am a Republican and my focus is to point to facts of the
situation and the truth of the climate in politics leads toward the assessment
I’ve given. Let me know if you have any questions. I’m happy to help where I
can. I also hold a large document that provides significant evidence against all the schools but the University of Phoenix file speaks volumes and will likely expand on the depth of the fraud, if you are interested.
Sincerely,
Tarah Gramza
