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Friday, January 17, 2025

Biden-Harris Administration Announces Final Student Loan Forgiveness and Borrower Assistance Actions (US Department of Education)

Total Approved Student Debt Relief Reached Almost $189 Billion for 5.3 Million Borrowers

The Biden-Harris Administration today announced its final round of student loan forgiveness, approving more than $600 million for 4,550 borrowers through the Income-Based Repayment (IBR) Plan and 4,100 individual borrower defense approvals. The Administration leaves office having approved a cumulative $188.8 billion in forgiveness for 5.3 million borrowers across 33 executive actions. The U.S. Department of Education (Department) today also announced that it has completed the income-driven repayment payment count adjustment and that borrowers will now be able to see their income-driven repayment counters when they log into their accounts on StudentAid.gov. Finally, the Department took additional actions that will allow students who attended certain schools that have since closed to qualify for student loan discharges.

“Four years ago, President Biden made a promise to fix a broken student loan system. We rolled up our sleeves and, together, we fixed existing programs that had failed to deliver the relief they promised, took bold action on behalf of borrowers who had been cheated by their institutions, and brought financial breathing room to hardworking Americans—including public servants and borrowers with disabilities. Thanks to our relentless, unapologetic efforts, millions of Americans are approved for student loan forgiveness,” said U.S. Secretary of Education Miguel Cardona. “I’m incredibly proud of the Biden-Harris Administration’s historic achievements in making the life-changing potential of higher education more affordable and accessible for more people.”

From Day One the Biden-Harris Administration took steps to rethink, restore, and revitalize targeted relief programs that entitle borrowers to relief under the Higher Education Act but that failed to live up to their promises. Through a combination of executive actions and regulatory improvements, the Biden-Harris Administration produced the following results for borrowers:

Fixed longstanding problems with Income-Driven Repayment (IDR). The Administration has approved 1.45 million borrowers for $57.1 billion in loan relief, including $600 million for 4,550 borrowers announced today for IBR forgiveness.

IDR plans help keep payments manageable for borrowers and have provided a path to forgiveness after an extended period. These plans started in the early 1990s, but prior to the Biden-Harris Administration taking office, just 50 borrowers had ever had their loans forgiven. The Administration corrected longstanding failures to accurately track borrower progress toward forgiveness and addressed past instances of forbearance steering whereby servicers inappropriately advised borrowers to postpone payments for extended periods of time. These totals also include borrowers who received forgiveness under the Saving on a Valuable Education (SAVE) plan prior to court orders halting forgiveness under the SAVE plan.

Today, the Department also announced the completion of the IDR payment count adjustment, correcting eligible payment counts. While the payment count adjustment is now complete, borrowers who were affected by certain servicer transitions in 2024 may see one or two additional months credited in the coming weeks. The Department is also launching the ability for borrowers to track their IDR progress on StudentAid.gov. Borrowers can now log in to their accounts and see their total IDR payment count and a month-by-month breakdown of progress.

Restored the promise of Public Service Loan Forgiveness (PSLF). The Administration has approved 1,069,000 borrowers for $78.5 billion in forgiveness.

The PSLF Program provides critical support to teachers, service members, social workers, and others engaged in public service. But prior to this Administration taking office, just 7,000 borrowers had received forgiveness and the overwhelming majority of borrowers who applied had their applications denied. The Biden-Harris Administration fixed this program by pursuing regulatory improvements, correcting long-standing issues with tracking progress toward forgiveness and misuse of forbearances, and implementing the limited PSLF waiver to avoid harm from the pandemic.

Automated discharges and simplified eligibility criteria for borrowers with a total and permanent disability. The Administration has approved 633,000 borrowers for $18.7 billion in loan relief.

Borrowers who are totally and permanently disabled may be eligible for a total and permanent disability (TPD) discharge. The Biden-Harris Administration changed regulations to automatically forgive loans for eligible borrowers based upon a data match with the Social Security Administration (SSA). This helped hundreds of thousands of borrowers who were eligible for relief but hadn’t managed to navigate paperwork requirements. The Department also made it easier for borrowers to qualify for relief based upon SSA determinations, made it easier to complete the TPD application, and eliminated provisions that had caused many borrowers to have their loans reinstated.

Delivered long-awaited help to borrowers ripped off by their institutions, whose schools closed, or through related court settlements. The Administration has approved just under 2 million borrowers for $34.5 billion in loan relief.

For years, students had sought relief from the Department through borrower defense to repayment—a provision that allows borrowers to have their loans forgiven if their college engaged in misconduct related to the borrowers’ loans. The Department delivered long-awaited relief to borrowers who attended some of the most notoriously predatory institutions to ever participate in the federal financial aid programs. This included approving for discharge all remaining outstanding loans from Corinthian Colleges, as well as group discharges for ITT Technical Institute, the Art Institutes, Westwood College, Ashford University, and others. The Department also settled a long-running class action lawsuit stemming from allegations of inaction and the issuance of form denials, allowing it to begin the first sustained denials of non-meritorious claims.

Today, the Department also approved 4,100 additional individual borrower defense applications for borrowers who attended DeVry University, based upon findings announced in February 2022.

“For decades, the federal government promised to help people who couldn’t afford their student loans because they were in public service, had disabilities, were cheated by their college, or who had completed decades of payments. But it rarely kept those promises until now,” said U.S. Under Secretary of Education James Kvaal. “These permanent reforms have already helped more 5 million borrowers, and many more borrowers will continue to benefit.”

The table below compares the progress made by the Biden-Harris Administration in these key discharge areas compared to other administrations.

	Borrowers approved for forgiveness
	Prior Administrations	Biden-Harris Administration
Borrower Defense (Since 2015)	53,500	1,767,000*
Public Service Loan Forgiveness (Since 2017)	7,000	1,069,000
Income-Driven Repayment (all-time)	50	1,454,000
Total and Permanent Disability (Since 2017)	604,000	633,000

* Includes 107,000 borrowers and $1.25 billion captured by an extension of the closed-school lookback window at ITT Technical Institute.

Additional actions related to closed school discharges

The Department today also announced additional actions that will make more borrowers eligible for a closed school loan discharge. Generally, a borrower qualifies for a closed school discharge if they did not complete their program and were either still enrolled when the school closed or left without graduating within 120 days before it closed. . However, the Department has determined that several schools closed under exceptional circumstances that merit allowing borrowers who did complete and were enrolled in the school more than 120 days prior to the closure to qualify for a closed school discharge. justify extending the look-back window beyond the applicable 120 or 180 days--allowing additional borrowers to qualify for a closed school discharge. Generally, eligible borrowers will have to apply for these discharges, but the Secretary has directed Federal Student Aid to make borrowers aware of their eligibility, and to pursue automatic discharges for those affected by closures that took place between 2013 and 2020 and who did not enroll elsewhere within three years of their school closing.

These adjusted look-back windows are:

To May 6, 2015, for all campuses owned at the time by the Career Education Corporation (CEC), which have since closed. That is the day CEC announced it would close or sell all campuses except for two brands. This affected the Art Institutes, Le Cordon Bleu, Brooks Institute, Missouri College, Briarcliffe College, and Sanford-Brown.
To December 16, 2016, for campuses owned by the Education Corporation of America (ECA) on that date that closed. ECA operated Virginia College, Brightwood College, EcoTech, and Golf Academies and started on the path to closure after its accreditation agency lost federal recognition and ECA could not obtain accreditation elsewhere.
To October 17, 2017 for all campuses owned or sold on that date by the Education Management Corporation (EDMC) and that later closed. That is the day EDMC sold substantially all of its assets to Dream Center Educational Holdings. The decision affects borrowers who attended the Art Institutes, including the Miami International University of Art & Design and Argosy University.
To April 23, 2021, for Bay State College. That is the day this Massachusetts-based college began to face significant accreditation challenges, which eventually led to the school losing accreditation and closing in August 2023.

Borrowers who want more information about closed school discharge, including how to apply, can visit StudentAid.gov/closedschool.

A state-by-state breakdown of various forms of student debt relief approved by the Biden-Harris Administration is available here.

Wednesday, December 11, 2024

Owners of Shuttered For-Profit Hussian College Sue ex-CEO, Charging Embezzlement (David Halperin)

The owners of shuttered for-profit Hussian College have sued the school’s former president and CEO, Jeremiah Staropoli, seeking $162 million in damages and penalties and claiming that Staropoli and close associates in the company embezzled funds and then conspired to cover up the alleged misdeeds.

On September 5, father-and-son Hussian owners David and Joshua Figuli sued Staropoli, other former Hussian employees, and two lending companies in Pennsylvania state court, alleging a racketeering conspiracy, fraud, embezzlement, and other abuses. The lending companies, contending there was a basis for federal court jurisdiction, removed the case from the state court to the U.S. District Court in Philadelphia.

While the companies and some of the former employees have filed answers to the complaint or moved to dismiss the case, Staropoli has not responded. In a recent court filing, the Figulis say they have tried to serve Staropoli with the complaint seven times and that Staropoli “appears to be evading service.”

Staropoli did not respond to a request for comment from Republic Report. The Figuli’s attorney also did not respond.

The Hussian closure

Hussian College, founded in Philadelphia in 1946, closed in summer 2023. At the time it shut down, Hussian had hundreds of students at campuses in Pennsylvania, Ohio, Tennessee, and California, plus online offerings, and taught programs in business, information technology, criminal justice, health sciences, and the arts. Hussian, in 2018, had expanded by taking over Tennessee-based for-profit Daymar College, a school that had in 2015 agreed to a $12.4 million settlement to end a lawsuit, alleging deceptive practices, brought by Kentucky’s attorney general.

For academic year 2021-22, the last year for which the U.S. Department of Education published data on the school, Hussian received $14.8 million in federal student aid dollars from the Department — about 74 percent of the school’s revenue.

In June 2022, accrediting agency ACCSC, the gatekeeper for the schools’ eligibility for federal student grants and loans, had put all the Hussian and Daymar campuses on system-wide warning, citing concerns about student achievement at the schools. But ACCSC removed the warning and renewed Hussian’s accreditation in December 2022.

The Figulis announced the closure in June 2023, two weeks after Joshua Figuli informed Hussian students by email that the school’s board of directors had replaced Staropoli because it had “lost confidence in his leadership.” Figuli wrote in a separate email to faculty and staff that a “gut-wrenching process of discovery” had produced “shockingly revealing” information about the state of the school under Staropoli.

Around the time of the announced closure, more than 15 Hussian faculty, staff, students, and parents spoke with Republic Report. They told me that Hussian repeatedly had been pressed by vendors for extended and blatant failures to pay its bills, that students had not been receiving federal aid disbursements in a timely manner, that Hussian owed money to many students, and that Hussian was enrolling new students even as it was about to close.

One Hussian employee at the time reported to me evidence of financial misconduct, improper expenses, and computer access manipulation by Staropoli. The employee also said that Joshua Figuli, who stepped in as CEO when Staropoli was dismissed, was failing to respond to calls and emails from students and staff who were trying to find out what was going on.

The lawsuit’s allegations

The lawsuit filed in September by the Figulis places the blame for Hussian’s collapse squarely on Staropoli, who joined Hussian as CEO in 2017, and a group of employees he brought in. The Figulis admit to knowing that Staropoli had past ties to some of these employees, but they claim the ties turned out to be much deeper than Staropoli told them, including, they allege, one employee engaged, before and after being hired, in an apparent romantic relationship with Staropoli. The Figulis allege that Staropoli caused Hussian to pay large and unwarranted bonuses to these favored employees, and even allowed one of them to work for Hussian while remaining on the payroll of a competitor school.

The Figulis also allege that Staropoli conspired with the two lending companies to make deals behind their backs and that Staropoli created fake email addresses for the Figulis so that he, not they, would receive confirmation of the deals.

The Figulis say that under Staropoli’s leadership, Hussian was failing to return to the government millions in unearned federal and state student aid, as required by law, and that Staropoli was concealing from them the schools’ “dire state of cash flow” and its failure, also, to transmit hundreds of thousands owed to students.

And they allege that school money was used to pay for Staropoli’s family and friends to vacation in Orlando and Nashville; for charges from Staropoli’s country club in Delaware; for tuition payments to Drexel University for one of the favored employees, despite that same employee ending Hussian’s tuition reimbursement policy; for “nondescript transfers to VENMO”; and more.

The Figulis claim that the alleged improper actions of Staropoli and other defendants induced them “to provide loans, advance costs, provide capital infusions, forego collections, and execute guarantees that summed to total direct losses in excess of $6,948,110.93.”

The two lending companies have moved to dismiss the case, one former employee has done the same, and another former employee filed an answer to the complaint. But former employee Steven Wojslaw, according to a filing by the Figulis, was served but has not filed any response.

Wojslaw filed his own lawsuit against Hussian in 2022, after he apparently put his own money into the company. When he was terminated, he sued to get the money back. That case was settled. Meanwhile, Velocity Capital Group, one of the lenders the Figulis have now sued, filed last year its own lawsuit in New York against Hussian and the Figulis, seeking its investment back. The Figulis have filed a counterclaim in that lawsuit.

In their new case against Starapoli, Velocity, and the others, the Figulis filed a motion on December 2 seeking permission to amend their original complaint to clarify, add, and withdraw certain claims, in part to respond to the motions to dismiss.

Who is Jeremiah Staropoli?

A former employee says information that the company learned around the time the Figulis forced out Staropoli came as “a giant shock” to the company. “It was insane,” this ex-employee says. “There were multiple victims: the Figulis, but also the staff, the students, and the government.” The ex-employee asks, “Why don’t people go to prison” when they “destroy so many lives?” This employee says that, as the school struggled, many employees believed the Figulis were the enemy, who wouldn’t invest enough money and time “to help Staropoli save the company,” but that the facts in the new lawsuit tell a different story.

Jeremiah Staropoli is a former president of the Towson, Maryland, campus of Brightwood College, a for-profit chain owned by now-collapsed Education Corporation of America. He also previously worked for the for-profit college operations Kaplan and DeVry. According to his LinkedIn page, he also was previously president of the Kentucky-based The Keeling Group, an IT consulting firm “specializing in custom software development, cloud consulting, network integration and higher education regulatory compliance solutions.”

Staropoli also was once listed as part of the management team of a fledgling coding bootcamp operation owned by the Figulis called AcademicIQ, but that business apparently never took off. Hussian College and AcademicIQ shared an address on Spring Garden Street in Philadelphia, along with a campus of non-profit Harrisburg University. David Figuli until recently served on the Harrisburg University board of trustees.

Hussian also has a connection to Colbeck Capital Management, slippery operators of campuses of the Art Institutes (now closed) ~~and South University (still open)~~ that were acquired in the wake of the collapse of Dream Center Education Holdings. Hussian acquired the Los Angeles-based Studio School, in which Colbeck had been an investor, and renamed the school Hussian College Los Angeles; Staropoli told me in 2019 that Colbeck-backed Studio Enterprise remained “a service provider” to the school.

The mess at Hussian seems to be just the latest example of how the federal investment in for-profit colleges often ends up as waste, fraud, and abuse — with taxpayers ripped off, students locked out in the cold, and some for-profit executives walking away with cash and fancy perqs. The for-profit college industry, recalling the lax enforcement in the first Trump term under Secretary of Education Betsy Devos, is salivating at the impending restoration of the leader of scam Trump University as leader of the United States. But, if it has any integrity at all, the new department that Elon Musk is supposedly setting up for Trump — committed to rooting out federal government waste, fraud, and abuse — should investigate this industry promptly.

[Editor's note: This article originally appeared on Republic Report.]

Wednesday, October 23, 2024

College Inc. Redux is Overdue

We desperately need a PBS Frontline updating of College Inc. This 2010 documentary by Martin Smith and Rain Media took us behind the curtains, into the big business of US for-profit higher education. At the time, College Inc. made an important statement: that for-profit higher education had become a racket, funded by greedy Wall Street investors, and that government oversight was necessary to rein in the worst abuses at schools like Corinthian Colleges and Ashford University.

From 2010 to 2012, the Senate Harkin Commission researched and exposed the systemic abuses of the largest for-profit colleges. And under President Obama, some of these abuses were addressed through policy changes at the US Department of Education, Department of Veterans Affairs, and Department of Defense.

Times Have Changed, Not In a Good Way

Much has happened in the last decade and a half since College Inc. was produced. US higher education did not become less predatory, even as a number of for-profit colleges (Corinthian Colleges, ITT Tech, Art Institutes, Le Cordon Bleu, and Virginia College) were shuttered. Republicans worked to ensure that meaningful policy changes, like gainful employment safeguards, were blocked. And some of the worst predators (Kaplan and Ashford) morphed into businesses owned by state universities (Purdue and University of Arizona).

Online education has become pervasive despite concerns about its effectiveness. Content creators and facilitators have replaced instructors at large robocolleges like Southern New Hampshire University, Grand Canyon University, Liberty University Online, and the University of Phoenix.

The for-profit (aka neoliberal) mentality has spread. Online Program Managers (OPMs) have brought for-profit education to non-profit institutions, carrying with it an enormous cost to consumers. Advertising and marketing has become out of control, helping fuel a manufactured College Mania of anxious parents and their children.

Despite the College Mania, folks have become more skeptical of higher education, and for good reason. Student loan debt has further crippled the lives of millions of Americans as Republicans have stepped in to block debt forgiveness. Community colleges and some state universities have gone through significant enrollment declines. Small colleges have closed. And elite colleges have become more wealthy and powerful and controversial. Something not on the radar in the 2010 documentary or in popular culture at the time.

Sunday, September 29, 2024

Layoffs in Higher Education

The Layoff.com is a "simple discussion board" for workers who would like to learn more about the rumors or possibility of job cuts in their organization. It's also been helpful for us to understand what has been happening behind the scenes in the US Higher Education business.

We have been observing and participating on this website for more than a dozen years, watching the fall of Corinthian Colleges (Everest College, Wyotech, and Heald), ITT Tech, Education Management Corporation (the Art Institutes and South University), the partial collapse of Apollo Group (University of Phoenix), Perdoceo (formerly Career Education Corporation), and Laureate International, and the transformation of Kaplan University to Purdue University Global and Bridgepoint Education (Ashford University) to University of Arizona Global.

As the College Meltdown has advanced, we have also observed a number of private schools collapse and public colleges and universities struggle. As enrollments continue to drop, we can expect more layoffs to occur and for education related businesses to struggle more.

The contents of this article are updated periodically, to illustrate trends in the College Meltdown. The most recent update was published October 29, 2024. 2U, the online program manager for elite university certificates has been the poster child in 2024, but there are many other companies and institutions in peril.

2U and edX

Adtalem Global Education

Albright College

Baldwin-Wallace University

Barnes and Noble College Booksellers

Cengage

Chegg

Concordia University, Ann Arbor

Coursera

Delta State University

DeVry University

Emerson College

Gwynedd-Mercy University

Keystone College

Maximus

National American University

Navient

Northern Illinois University

Penn State University

Perdoceo

Portland State University

Saint Cloud State University

Sallie Mae

Southern New Hampshire University

Tennessee State University

Udemy

University of Arizona

University of Maryland Global

University of New Orleans

University of North Carolina, Asheville

University of Phoenix

University of Wisconsin-Milwaukee

Walden University

Western Illinois University

Western Washington University

West Virginia University

Wittenberg University

Sunday, February 25, 2024

Letter to Secretary of Education Miguel Cardona Regarding Borrower Defense to Repayment and Gainful Employment Regulation (Michael DiGiacomo)

Dear Secretary Cardona, Department of Education Staff, and Regulating officials,

My name is Michael DiGiacomo. I am a former student and victim of two closed for-profit scam colleges and the student loan industry. I have been fighting this industry since 2003-2006, when I realized I had been played badly by these deceptive debt factories.

These "colleges," and others like them, were easily able to trick not just me, but many thousands of poor, first-time people into attending. The false promises of dream job placement stats and leads, fueled by the student loan industry's "College Students make A Million Dollars More" pitch, along with high pressure tactics, lack of financial understanding, and easy access to government funds made us all the prime target for these scamsters.

They also piled on fraudulent private student loans as they worked hand-in-hand with commercial lenders to help themselves fleece the 90/10 requirement to gain more federal money funds. The promise of the future our parents and grandparents had was turned into a scam to fuel the next big bubble and wallets of those schools, the industry, and their lobbyists.

Now, after having gone through this fight for almost 20 years, through the recruitment lies, joblessness, default, garnishment, depression, hopelessness, and the unknown, I have fought to have my federal student loans canceled as part of Sweet v Cardona [DEVOS] and the defense to repayment process. I am still miles away from relief.

The paychecks, garnished for federal loan money by Sallie Mae-owned debt collectors for years, will never be returned as they somehow escape the parameters of the Sweet v Cardona [DEVOS] settlement.

I spent years choosing between food or gas to get to work because federal student loan garnishments don't take those necessities into account when they rip away your paycheck. I have also not been refunded for years of payments made to the US Department of Education and Nelnet now that the federal loans have been closed in the settlement.

My GI BILL even dried up/time ran out because I was too ruined financially and burned by those schools to want to finally return to ANY college again. Unfortunately, I am not alone on this. Over and over again I have heard the same stories. I have lost friends, have seen people alienate family, or even abandon our country.

Now with Sweet v Cardona [DEVOS] class and post class members, I have heard that even with evidence, payments are not returned even though the loans are closed. I have seen servicers that are supposed to be helping class members [and post class] become whole pinball students away from them back to the department of education or others or give flat out incorrect information.

And why does the class not cover federal loans held by Sallie Mae or other pre-Obamacare lenders?

Why should the same corporate banks that helped the scamster schools be allowed to keep the funding?

Why should the crooks be allowed to keep the robbery purse?

Why is the process of getting a federal loan legally closed so hard?

Why is there no federal program in place to help with the predatory/fraudulent private student loans?

The processes for Defense to Repayment and the Gainful Employment regulations are hard to follow for someone as knowledgeable as myself about this, never mind a first time student or parent with no experience in the process. Clearly the "Colleges" aren't being honest in the first place to their customers, never mind slow regulators and watch dogs.

I have watched the Student Aid website under serve people applying to defense to repayment they rightfully should be able to use. I have watched it only allow one school when they were hit by multiple. I have seen the website break or take minutes just to type the final name line. This is inexcusable since this is the one chance for people to make things right.

The government guaranteed funding needs to be heavily protected on what schools get access to, and on the other side students need to be easily able to be made whole when it turns out there is systematic fraud. The fraudsters are faster than the government patches to fix it.

Often when someone gets hit by one for-profit college, they get easily hit by a second one thinking the first was an isolated incident.

I have watched this fight and have been part of it for too long to watch it happen all over again. Regulation needs to be strong on the part of protecting borrowers and easy for borrowers to be made whole. The promise of a government accredited college should be just that. It should not be just an arm of a corporate entity or allowed to be made "Not-for-profit" just because they worded it differently.

The same corporate CEO's should not be trading companies and schools around like baseball cards or like whack a mole game once the one before it crashes down. Please put borrowers first if you want to have an educated society and protect them from corporate scamsters. And if somehow the scamsters DO get the upper-hand, please make it easier and more understandable for borrowers to get made whole.

When I joined the Army, I made a promise I would protect this country from all threats, foreign and domestic. The for-profit college and student loan industry is a domestic threat to this country and the public. They have decimated generations of prospective students and you still haven't fully picked up the pieces yet.

Sincerely, Michael DiGiacomo

Veteran US Army

Victim of the New England Institute of Art aka "The Art Institutes" Aka Education Management Corporation

Victim of Katherine Gibbs aka Gibbs aka Sanford Brown aka Career Education Corporation

Victim of SallieMae aka USAFunds Aka Pioneer Credit Aka Navient

Monday, September 25, 2023

Art Institutes Close. Students May Be Eligible for Student Loan Forgiveness.

The Art Institutes (Ai) is closing its doors this Friday, September 30. Ai has locations in Miami and Tampa (FL), Atlanta (GA), Austin and Houston (TX), and Virginia Beach (VA). About 2000 students are affected. The Art Institutes website provides closed school information.

The Art Institutes chain had a storied history, starting in Pittsburgh, Pennsylvania in 1921 and growing to 50 locations by 2010. Its boom was the result of intensive profit-making in the higher education business in the 1990s and early 2000s. Goldman Sachs was a key contributor to its explosive growth.

Ai's decade-long decline was part of a wave of for-profit colleges that faced increased federal scrutiny for low graduation rates, high levels of student loan debt, and declining enrollment. Unlike Corinthian Colleges (2015), ITT Tech (2016), Westwood College (2016), and Virginia College (2018), the Art Institutes survived with government assistance--but with less than ten campuses.

Art Institute Students

Students from the Art Institutes may transfer to other schools, but many of their credits may not be accepted by other institutions. Consumers should also be extremely wary of the schools they plan transferring to.

Students would normally be allowed to have their student loans forgiven through a process called Closed School Discharge. But that avenue for remedy has been paused. Present and former students, however, may be able to have their student loan debt relieved through Borrower Defense to Repayment if they can prove that they were defrauded.

Borrower Defense-Sweet vs Cardona is a Facebook space for people who have already succeeded in getting their student loan money returned to them and others working on claims. Borrower Defense-Sweet vs Cardona has more than 14,000 members.

Monday, April 10, 2023

EdTech Meltdown

The Silicon Valley tech downturn has been creating reverberations in other parts of the economy and in other areas of the US.

Edtech, a small subset of the tech industry that overlaps with higher education, is facing major headwinds as skepticism about higher education and the economy grows. Even two industry insiders, Noodle CEO John Katzman and Kaplan executive Brandon Busteed have been critical of the short-term thinking and questionable outcomes of edtech. Katzman has called some companies in the space "more adtech than edtech," implying that some do little more than marketing and advertising for colleges and universities.

Ultimately, it's US consumers who are feeling the greatest pain as participants in online education--a mode of instruction that for millions of people may have more risks than benefits--within an increasingly dysfunctional economy that produces expensive education and fewer good jobs.

Significant problems that were observed in large subprime colleges like University of Phoenix, Corinthian Colleges, ITT Tech, DeVry University, Colorado Tech, and the Art Institutes more than a dozen years ago have resurfaced in edtech. And other problems unique to edtech have emerged.

Chegg is an edtech company based in Santa Clara, California, and provides homework help, online tutoring, and other student services. The company's value grew more than 300 percent in 2020, during the Covid pandemic, but has faced headwinds for the last two years. This includes allegations that Chegg enables students to cheat on homework and other assignments. Derek Newton has chronicled this problem in the substack The Cheat Sheet.

[Chegg shares grew in 2020 during the Covid pandemic. Source: Seeking Alpha]

Coursera is a publicly traded MOOC based in Mountain View California. Shares started trading in April 2021. The company has under-performed as a profit making enterprise. Massive Open Online Courses were once seen as a wave of the future in adult education but their popularity has waned.

[Coursera has underperformed since its IPO in April 2021. Source: Seeking Alpha]

2U (based in Lanham, MD) and Guild Education (based in Denver) and are two edtech companies based outside of Silicon Valley.

2U is a publicly traded Online Program Manager (OPM). The company services major universities such as the University of Southern California and University of North Carolina with support for some of their online degree programs. 2U has received an enormous amount of funding from Cathie Wood, a major Silicon Valley investor, and has continued to receive support despite a long record of financial losses.

Some 2U investors have grown tired of persistent losses--and it has shown in the declining share price. The company also faces increased scrutiny in DC for recruiting consumers unable to recoup the cost of education for high-priced masters degrees in areas such as social work. 2U acquired edX, the Harvard-MIT MOOC in 2021 and its profitability remains to be seen.

In 2023, 2U sued the US Department of Education for attempting to require more transparency between OPMs and their clients. This strategy is similar to the defensive strategy that subprime colleges have used to stop gainful employment regulations, and more recently, borrower defense to repayment rules.

[2U shares have dropped more than 90 percent over the last 5 years. Source: Seeking Alpha]

Guild Education is a privately held corporation that grew to an estimated $4.4B evaluation in a few years. Guild serves businesses by administering online education benefits for large corporations such as Walmart, Target, and Macy's. While its work may help companies with their bottom line, they appear to do little for their workers.

At least ten of Guild's investors are based in Silicon Valley, including Silicon Valley Bank and venture capital firms in San Francisco, Palo Alto, and Menlo Park, California. Valuations.fyi reports Guild's estimated value at $1.3B, a 70 percent drop from its peak in June 2022.

[Image above: Guild's valuation in Billions from valuations.fyi]

The Higher Education Inquirer will continue to observe changes in edtech as the College Meltdown advances.

A ‘rigged’ economy and skepticism about college (Paul Fain, Open Campus)

How University of Phoenix Failed. It's a Long Story. But It's Important for the Future of Higher Education.

The Cheat Sheet (Derek Newton)

2U Virus Expands College Meltdown to Elite Universities

Erica Gallagher Speaks Out About 2U's Shady Practices at Department of Education Virtual Listening Meeting

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

Guild Education: Enablers of Anti-Union Corporations and Subprime College Programs

College Meltdown 2.0

The Growth of "RoboColleges" and "Robostudents"

The American Dream is Over (Gary Roth)

Monday, April 3, 2023

Higher Education FOIA Requests to US Department of Education

The Higher Education Inquirer has made a number of Freedom of Information Act (FOIA) requests to the US Department of Education. Here's our current list.

23-01436-F

The Higher Education Inquirer is requesting copies of the current contracts between the US Department of Education and Maximus (including but not limited to subsidiaries such as AidVantage). If this is not possible we would like the reported dollar amount for each contract. This request is part of a larger effort to assess the student loan debt portfolio. (Date Range for Record Search: From 01/01/2010 To 04/03/2023)

23-01426-F

The Higher Education Inquirer is requesting the dollar amount of student loan funds issued to for-profit colleges each year from 1972 to 2021. We will accept interim or partial data. (Date Range for Record Search: From 01/01/1973 To 04/03/2022)

23-01369-F

The Higher Education Inquirer is requesting an estimate of the number of student loans in the student loan portfolio that originated (1) before 1978, (2) before 1983, (3) before 1988, and (4) before 1993. This is part of a larger effort to understand the estimated $674B in unrecoverable student loan debt. (Date Range for Record Search: From 01/01/2023 To 03/28/2023)

23-01324-F

The Higher Education Inquirer is requesting a count of the number of Borrower Defense to Repayment claims against South University and the Art Institutes, in the Consumer Engagement Management System (CEMS) up to January 1, 2023. We would also like to know if their parent company, Education Principle Foundation (EPF), is listed as the owner of both schools in the CEMS computer database. (Date Range for Record Search: From 01/01/2023 To 03/22/2023)

23-01263-F

The Higher Education Inquirer is requesting a list of all the variables/categories in the Consumer Engagement Management System (CEMS). CEMS is mentioned in FOIA 22-01683F filed by the National Student Legal Defense Network. (Date Range for Record Search: From 01/01/2023 To 03/16/2023)

23-00865-F

We are requesting an accounting of US Department of Education Borrower Defense to Repayment (BD) claims against the University of Phoenix. Specifically, we are asking for the (1) number of BD claims, (2) the number processed, and (3) the number approved. The date range is from February 20, 2016 to January 26, 2023. If there is a reasonable way to estimate the total dollar amount in a timely manner, we would also like that. This request is similar to FOIA request 22-03203-F, and is a result of discovering that the University of Arkansas System has been in negotiations to acquire University of Phoenix through a nonprofit organization. (Date Range for Record Search: From 02/20/2016 To 01/26/2023)

Thursday, March 16, 2023

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

The Higher Education Inquirer has posted a number of articles about student loan debt. In 2023, the student loan mess has reached epic proportions. Not only has the US Federal Student Aid debt portfolio reached more than $1.6 Trillion, we learned that $674 Billion was estimated to be unrecoverable.

In California, the US District Court in Sweet v Cardona agreed to a $6 Billion settlement between student debtors and the US Department of Education.

In Texas, a group representing for-profit colleges has sued the US Department of Education for their actions in settling Borrower Defense claims.

And across the US, about 40 million student debtors and their families are awaiting a decision from the US Supreme Court—a decision that will not likely favor the debtors.

Borrower Defense, Subprime Colleges, Subprime Programs

Borrower Defense to Repayment claims are claims by student loan debtors that their school misled them or engaged in other misconduct in violation of certain state laws. The Department of Education may discharge all or some of the student loan debt and hold the school and its owners responsible.

As of January 2023, there are more than three quarters of a million Borrower Defense claims against schools. And each month, about 16,000 new claims are added. Evidence from the Sweet v Cardona case revealed that only about 35 workers were responsible for processing hundreds of thousands of claims. Those claims have been disproportionately made against a number of for-profit colleges and formerly for-profit colleges, what we call “subprime colleges.”

Some of these subprime schools have closed (Everest College, ITT Tech, and Westwood College for example), some remain in business as for-profit colleges (like University of Phoenix and Colorado Tech), some have changed names and become covert for-profit colleges or robocolleges (like Purdue University Global, University of Arizona Global Campus, and the Art Institutes), and some schools act act like subprime colleges regardless of tax status. This includes low-return on investment programs at several US robocolleges and overly expensive graduate programs offered by 2U, an online program manager for elite colleges.

In the Sweet v Cardona case, more than 200,000 student borrowers are expecting to receive full debt relief after years of struggling. A Facebook group Borrower Defense-Sweet vs. Cardona currently has more than 14,000 members.

Named plaintiffs Theresa Sweet (L) and Alicia Davis (R) outside the federal district court in San Francisco on November 6, 2022, three days before the final approval hearing in Sweet v Cardona (Image credit: Ashley Pizzuti)

Transparency and Accountability

The US Department of Education keeps an accounting of Borrower Defense claims, but only publishes the aggregate numbers, not institutional numbers. Those institutional numbers do make a difference in promoting transparency and accountability for the largest bad actors. So why does the Department of Education not publish those institutional numbers?

The National Student Legal Defense Network submitted a FOIA (22-01683F) to the US Department of Education (ED) in January 2022 asking just for that information. And what HEI has discovered is that just a small number of schools garnered the lion's share of the Borrower Defense claims. To get a digital copy of that information, please email us for a free download.

Tuesday, January 17, 2023

Need Student Debtors to Provide Information about Low-Financial-Value Postsecondary Programs (Updated February 15, 2023)

[Editor's Note: The public comment period ended February 10, 2023.]

The US Department of Education is accepting public comments as a Request for Information (RFI) about "Public Transparency for Low-Financial-Value Postsecondary Programs." The announcement is available at the US Federal Register.

The URL to make these comments is at

https://www.regulations.gov/document/ED-2022-OUS-0140-0001

As with most US government rules and policies, industry insiders have great influence in these decisions--and concerned citizens are often shut out of the process. When consumers do have a chance to speak, they may not even know of those opportunities. That's why the Higher Education Inquirer is asking student loan debtors to contribute to this RFI while they can.

Tell DC policymakers and technocrats about your unique struggles (and your family's struggles) tied to student debt--and what could be done to better inform consumers like you.

There you can find public comments that have already been made. As of February 15, only 129 comments were posted.

According to the announcement:

"a misalignment of prices charged to financial benefits received may cause particularly acute harm for student loan borrowers who may struggle to repay their debts after discovering too late that their postsecondary programs did not adequately prepare them for the workforce. Taxpayers also shoulder the costs when a substantial number and share of borrowers are unable to successfully repay their loans. The number of borrowers facing challenges related to the repayment of their student loans is significant."

The Request for Information continues...

"Programs that result in students taking on excessive amounts of debt can make it challenging for students to reach significant life milestones like purchasing a home, starting a family, or saving enough for retirement, ultimately undermining their ability to climb the economic mobility ladder. Especially for borrowers who attended graduate programs, debt-to-income ratios often rise well above sustainable levels. IDR (Income-Driven Repayment) plans also cannot fully protect borrowers from the consequences of low financial-value programs. For instance, IDR plans cannot give students back the time they invested in such programs. For many programs, the cost of students' time may be at least as significant as direct program costs such as tuition, fees, and supplies. Loans will also still show up on borrowers' credit reports, including any periods of delinquency or default prior to enrollment in IDR."

"The Biden-Harris Administration is committed to improving accountability for institutions of higher education. One component of that work is to increase transparency and public accountability by drawing attention to the postsecondary programs that are most likely to leave students with unaffordable loans and provide the lowest financial returns for students and taxpayers."

CECU, an group representing for-profit colleges, has an organized effort to protect its interests.

Meanwhile, Robert Kelchen has provided an EXCEL spreadsheet that provides many answers. The dataset covers 45,971 programs at 5,033 institutions with data on both student debt and earnings for those same cohorts. We found more than 12,200 programs where debt exceeds income. And more than 7200 programs resulted in median incomes of less than $25,000 a year with debt greater than $10,000.

While some of these high-debt programs in medicine and law may eventually be profitable, many more paint a picture of struggle with a lifetime of debt peonage. Cosmetology schools had a large number of low-income programs. But the fine arts, humanities, social sciences, and education also produced low-value programs in terms of debt to income ratio.

Some of subprime schools HEI has been investigating (Purdue University Global, University of Arizona Global, The Art Institutes) had a number of low-value majors. But elite and brand name schools like Duke, Drexel, Emory, Syracuse, Baylor, DePaul, New School, and University of Rochester even have high debt and low-income programs.

Wednesday, August 3, 2022

Visual Documentation of the College Meltdown Needed

The Higher Education Inquirer is looking for images to document the College Meltdown which began in 2010.

The US Department of Higher Education posts hundreds of campus closings each year. Images of these closed schools can be used to document an important part of US higher education history.

Closed campuses vary in size, from high school classrooms, hotel conference rooms, and store fronts, to satellite and branch campuses, to small private colleges, and larger career colleges. Some schools have been repurposed, others demolished, and others remain in disrepair--as ruins--and relics of a more humane (or at least more human) past.

Over the last two decades, the University of Phoenix alone closed more than 500 campuses, many which were conveniently located near US interstate highways. In 2025, UoPX will have just one campus, located in Phoenix, Arizona.

In 2015, Corinthian Colleges and Le Cordon Bleu went out of business. A year later ITT Tech closed all of its doors. The Art Institutes also closed dozens of campuses. In 2018, Virginia College campuses closed, and Kaplan Higher Education sold its remaining properties to Purdue University. Today, only a few Purdue University Global campuses remain. DeVry University has closed many locations, but several ghost campuses, those with few if any students, remain. Ashford University became a fully online University of Arizona Global.

In just a few decades, under the guise of creative disruption, brick and mortar colleges with skilled professors and staff have been replaced by large online robocolleges that hire few if any instructors and offer fewer student services, such as mental health counseling. And community branch campuses have been replaced by online program managers (OPMs) that advertise, recruit, and even write curriculum for regional public universities and elite private colleges, often without the knowledge of the students/consumers.

The US Department of Education's PEPS Closed School Monthly Report has been largely ignored by the media. But as a historical document, the list is telling. Since 1986, approximately 18,000 campus closings have been reported. The peak year for closings was 2016, when more than 1100 schools were reported as closed.

[Bay State College in Boston, Massachusetts, which has partially closed. BSC is owned by Ambow Education., which is in deep financial trouble]

How University of Phoenix Failed. It's a Long Story. But It's Important for the Future of Higher Education.

Abandoned Long Island College Sits in Disrepair, And Community Says It's A Danger (Greg Cergol, NBC New York)

The Growth of "RoboColleges" and "Robostudents"

PEPS Closed School Monthly Report

Monday, May 9, 2022

College Meltdown 2.2: Who’s Minding the Store?

The latest report by the Government Accountability Office (GAO) about wrongdoing by higher education online program managers (OPMs) felt disappointing to social justice advocates who watch the space and know the bad actors who were unnamed in the GAO document.

US higher education has always been a racket, but its latest pursuits have gone untouched and even unmentioned. GAO’s behavior, though, is no worse than the many other corporate enablers who are supposed to be minding government funds wasted –or worse yet—used to prey upon US working families.

The US Department of Education has done little lately to safeguard consumers from predatory student loan servicers like Maximus and Navient, or subprime universities like Purdue University Global and University of Arizona Global, and hundreds of small players who offer marginal education leading to less than gainful employment.

The Department of Veterans Affairs has done little lately to protect veterans and their families from being ripped off by subprime schools. At one time, VA was a leader in tracking GI Bill complaints and making them public, but transparency and accountability are far from what they were.

The US Department of Defense (DOD) has been asleep at the wheel with its distribution of DOD Tuition Assistance funds to subprime colleges. Its complaint system is close to nonexistent.

The US Department of Justice (DOJ) and US Securities and Exchange Commission (SEC) have done little to rein in bad actors in higher education, leaving the work to states attorneys general. Hate crimes on campus have also been ignored. In other cases, elite university endowments have received little notice despite eyebrow raising profits. Student loan asset-backed securities are also below their radar.

During the pandemic, The Department of Treasury has failed to adequately oversee funds issued to the Federal Reserve and the Small Business Administration funneled to subprime schools.

The Federal Trade Commission (FTC), which had done an adequate job investigating predatory lead generators and marketing and advertising false claims has been hamstrung by a recent court decision and can no longer fine higher ed wrongdoers. Predatory companies know this and will act accordingly—as criminals do when cops are not on the beat.

What lack of oversight have you seen with federal agencies tasked to protect higher education consumers?

Sunday, February 20, 2022

College Meltdown 2.0

College Meltdown 2.0 is distinctly different than the College Meltdown that started in 2010.

The first wave of the College Meltdown (2010-2021) resulted in a slow and steady drop in overall US college enrollment, with dramatic losses among for-profit colleges and community colleges. Corinthian Colleges, ITT Educational Services, and Education Management Corporation were three large for-profit chains to close. Small private liberal arts schools and regional universities also experienced losses. More folks were moving into the growing educated underclass.

Elements of College Meltdown 2.0 include publicly held corporations. Click on the image to see the chart (Source: Seeking Alpha)

College Meltdown 2.0 comes as the Coronavirus becomes more manageable. However US fascism continues to advance, student loan debt is slowly approaching $2 trillion, and the 2026 enrollment cliff is just a few years away. This new wave includes remnants of for-profit colleges like National American University, Stratford University, South University, the Art Institutes, University of Phoenix (owned by Apollo Global Management), Career Education Corporation (aka Perdoceo), and DeVry University (owned by Cogswell Education) as well as national accreditor ACICS.

The largest element of College Meltdown 2.0 is federal student loan debt, which appears to be rising to an unsustainable level--as it hamstrings the lives of millions of families. When mandatory student loan payments resume (scheduled for May 1), long-term default rates may range from 30 and 50 percent. It also appears that at least $500 billion of the Federal Student Aid (FSA) student loan portfolio will be unrecoverable.

College Meltdown 2.0 also involves online program managers (OPMs) that service elite schools (2U), regional universities (Academic Partnerships), and subprime robocolleges (Zovio-University of Arizona Global and Graham Holdings-Kaplan-Purdue University Global).

Student loan servicers and private student loan companies (Maximus, Navient, Sallie Mae, Nelnet), publishers and other edtech enterprises (EducationDynamics, Chegg, Barnes & Noble Education, Coursera, and Guild Education) are implicated or at least entangled in the mess. Higher education accreditors and student loan asset-backed securities (SLABS) are also worth monitoring.

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