Higher Education Inquirer : Search results for FOIA

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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)

Wednesday, July 10, 2024

New Data Show Nearly a Million University of Phoenix Debtors Owe $21.6 Billion Dollars

The Higher Education Inquirer has just received a Freedom of Information Act (FOIA) response from the US Department of Education, stating that about 971,000 current student loan debtors who have attended the University of Phoenix have accumulated an estimated $21.6B in debt. The FOIA is Department of Education FOIA 23-02912-F. These debt numbers are consistent with a previous HEI analysis.

We have been unable to learn whether this accumulated debt includes the hundreds of millions in debt that has already been forgiven--and that its present and future owners may be liable for. In 2023, we reported that approximately 73,000 debtors from the University of Phoenix had filed borrower defense fraud claims, and that more than 19,000 cases were granted immediate relief in the Sweet v Cardona settlement.

Through another FOIA request, we also discovered 6,265 consumer complaints in the Federal Trade Commission database made after its current owners took over. In 2019, the FTC and the University of Phoenix settled a claim for $191M for deceptive employment claims. It would appear that Phoenix has not done enough to clean up its act.

The Higher Education Inquirer has been working for more than six years to get data about the school's noncompliance with the Department of Defense Tuition Assistance (TA) program, where servicemembers have been systematically preyed upon--and where Trump officials and their surrogates worked to cover up malfeasance by subprime schools--including the University of Phoenix. We hope to report on this topic later.

The University of Phoenix is presently owned by Apollo Global Management and Vistria Group, who have been unsuccessfully trying to sell the school for at least three years. Previous potential suitors, held to secrecy, have included Tuskegee University, UMass Global, and the University of Arkansas System.

Apollo Global Management is currently negotiating with the State of Idaho, which would incur $685M in debt to acquire the school. State officials are wary of the deal, and those with strong principles are unlikely to approve. But it's possible that other politicians may change their minds: if they or their families are properly compensated, directly or indirectly, for taking the risks to their reputations and careers.

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

Fraud Claims Against University of Phoenix Continue to Mount

University of Phoenix articles

Borrower Defense articles

Wednesday, July 12, 2023

University of Phoenix and the Ash Heap of Higher Ed History

(Updated September 14, 2023)

The University of Phoenix (or at least its name) may soon enter the ash heap of US higher education history--and rise again as a state-run robocollege. But it shouldn't--at least not yet. Once hailed as the leader in affordable adult education for workers entering middle management, it is a shell of its former self--in an economy less certain for workers and consumers.

With the school's wreckage are approximately one million people buried alive in an estimated $14B-$35B in student loan debt.

Pattern of Fraud

As of January 2023, more than 69,000 of these student loan debtors have filed Borrower Defense to Repayment fraud claims with the US Department of Education against the University of Phoenix (UoPX). Many more could file claims when they become aware of their rights to debt relief. In the partial FOIA response below, the US Department of Education reported that 69,180 Borrower Defense claims had been made against the school.

In a recent federal case, Sweet v Cardona, most if not all of the 19,860 "denied" cases were overturned in favor of the student loan debtors. We estimate the smaller number of fraud claims alone to amount to hundreds of millions of dollars.

Through a FOIA request, we also discovered 6,265 consumer complaints in the FTC database. In 2019, the FTC and the University of Phoenix settled a claim for $191M for deceptive employment claims. Based on the consumer complaints, we have no reason to believe that Phoenix has changed its behavior as a bad actor.

On May 3, 2023, six US Senators (Warren, Brown, Blumenthal, Durbin, Merkley, Hassan) called for the US Department of Education, Department of Veterans Affairs, and Department of Defense to investigate the University of Phoenix for launching a new program suggesting that it was a public university. The letter stated that the school "has long preyed on veterans, low-income students, and students of color."

Wolves in Sheep's Clothing

University of Phoenix's owners could potentially be liable for refunding the US government for the fraud. But as a state-related organization, it may be more politically difficult to claw back funds, no matter how predatory the school is.

Purdue University Global and University of Arizona Global set a precedence in state-related organizations acquiring subprime schools (Kaplan University and Ashford University) and rebranding them as something better. Whether they are better for consumers is questionable. Phoenix will have to cut costs, largely by reducing labor. Using Indian labor (like Purdue Global) and AI could be profitable strategies. It's likely that this deal, even if profitable, will add fuel to the growing skepticism of higher education in the US.

University of Phoenix's Finances

Apollo Global Management and Vistria Group currently own University of Phoenix but have been trying (unsuccessfully) to unload the subprime college for more than two years. Little is publicly known about the school's finances. What is known is that UoPX gets about $800M every year from the federal government, through federal student loans, Pell Grants, GI Bill funds, and DOD Tuition Assistance.

Despite this government funding, US Department of Education data show the school's equity value for the Arizona segment declined significantly, from $361M in FY 2018 to $187M in FY 2021.

$347M of the University of Phoenix's $518M in assets are intangible assets. Intangible assets typically include intellectual property and brand reputation. The school has $348M in liabilities.

The University of Phoenix has been reducing expenses by cutting instructional costs, from $70M in FY 2020 to $60M in FY 2021. UoPX spends about 8 percent of its revenues on instruction.

Marketing and advertising expenses are not available, but Phoenix has been visible on the Discovery Channel's Shark Week, CBS' Big Brother, and other television events. ISpot.tv reports that University of Phoenix spends millions of dollars each year on television ads. On one ad alone, the ad spend from February 2023 to July 2023 was an estimated $3.5M.

Attempts to Sell UoPX

There have been two known potential buyers for the University of Phoenix: the University of Arkansas System and the University of Idaho. In both cases, the owners required the potential buyers to keep the deal secret until the sale was imminent.

Fear of the impending higher education enrollment cliff appears to be an important pitch to potential buyers.

Arkansas, the first target, was in the process of making the deal, and it might have gone through if nit for the voice of one whistleblower and one outstanding investigative reporter, Debra Hale Shelton of the Arkansas Times.

In the case of Idaho, news of the potential deal was publicly noted just one day before the preliminary agreement was made with the Idaho Board of Education. Two other secret meetings were held before that.

A number of journalists including Kevin Richert (Idaho EdNews), Laura Guido (The Idaho Press), Troy Oppie (Boise State Public Radio), and Noble Brigham (Idaho Statesman) have exposed some of the problems and potential problems with the deal. In June, Idaho legislators began questioning the acquisition.

More recently, the opinion editor at the Idaho Statesman argued that the deal may actually be worthwhile.

Particulars about the finances are sketchy at best and misleading at worst. The University of Phoenix is said to include $200M in cash in the deal, but they have not said how much of that sum is required by law as "restricted cash"--money the school needs if the Department of Education needs to claw back funds. Phoenix also claims to be highly profitable, but without showing any evidence.

What is known about the deal is that the University of Idaho will have to borrow $685M and put its (bond) credit rating at risk. The school has not identified important information how the bonds would be sold (underwriters, bond raters, date to maturity, interest rate).

The University of Idaho has created an FAQ to answer questions about the sale, but HEI has identified a number of misleading statements about University of Phoenix's present finances (failure to report the school's equity), potential liability (cost of tens of thousands of Borrower Defense claims), and leadership (lack of background information about Chris Lynne, the President of the University of Phoenix). These deficiencies have been reported to the University of Idaho and to the Representative Horman.

On June 20, Idaho Attorney General Raul Labrador filed a lawsuit to halt, or at least slow down the deal.

The University of Idaho submitted a Pre-Acquisition Review from the US Department of Education, and it may take up to three months before the application is completed.

As of September 2023, the deal is far from done. Since this article was first published there have been a number of developments:

On September 11, US Senators Elizabeth Warren, Dick Durbin, and Richard Blumenthal called on University of Idaho President Green to abandon the sale. The Senators also asked Green if he had a plan to pay for the Borrower Defense claims, noting that University of Arizona may be on the hook for thousands of claims against Ashford University (aka University of Arizona Global campus).

In November, the Joint Finance-Appropriations Committee of the Idaho Legislature is expected to discuss the issue again.

*The Higher Education Inquirer has made a FOIA request for more up-to-date numbers from the US Department of Education. We have also filed FOIA requests with the FTC.

Monday, October 7, 2024

Trump's DOD Failed to Protect Servicemembers from Bad Actor Colleges, But We Demand More Evidence

The Higher Education Inquirer has been waiting since December 2017 for information from the US Department of Defense (DOD) about decades of predatory behavior by subprime colleges against military servicemembers, a disturbing pattern reduced by the Obama Administration and made worse again by the Trump Administration. We are still waiting for information, nearly seven years later and through multiple efforts, as Donald Trump runs again for President and Commander in Chief of the Armed Forces. And today, with yet another delay, DOD says they won't have the response until after the election.

In 2012, the Obama Administration, through Executive Order 13607, established policies for increased oversight of schools that received DOD Tuition Assistance (TA) funds. DOD TA is a program that pays schools for servicemembers going through college. For several decades before Obama was the President, subprime schools systematically exploited servicemembers, veterans, and their families, collaborating formally and informally with military officials and educators. They even held conferences at the national and state level through the Council of College and Military Educators (CCME).

As part of Obama era reform, DOD Voluntary Education and their contractor (PwC and later Gatehouse) were to select for review 200 schools at random and 50 schools that were the worst performing. The worst actors could be sanctioned. But it never happened.

In 2017, the Trump Administration began rolling back these protective measures and decided not to provide information to the media to avoid "a witch hunt." This action shielded bad actor schools from public scrutiny and sanctions that the schools could receive for abusing servicemembers.

In December 2017, we contacted a DOD VOL ED official who refused to answer us. But based on other bits of information, including data from the Department of Veterans Affairs, we believe we know many of these bad actor schools. Some of those schools, like the politically connected University of Phoenix, would be obvious to those who follow bad actors in higher education. But we wanted the DOD to publicly name them. That DOD official is now working as a special advisor to the Department of Education Federal Student Aid. Our intent was not to target that official, but to get to the bottom of the problem, which we believe to be at a higher level of management, and possibly to then-President Trump.

In May 2019, we filed a Freedom of Information request (DOD OIG-2019-000702) asking for a list of the 50 worst actor schools for 2017 and 2018. DOD denied that such a list existed despite evidence to the contrary. We filed another FOIA request in 2021, 21-F-0411 and even with more information that we provided, they denied that such a list existed.

Our last attempt for information, DOD FOIA 22-1203-F, was filed in July 2022 to obtain communications between the high-level DOD Voluntary Education official and others. DOD has given us a number of excuses for the delays, and we have modified the request to limit the search. In the meantime, we have contacted politicians and national media to help us with what's been going on. So far, nearly seven years later, no one has acted, as servicemembers continue to be ripped off by predatory subprime colleges.

Schools are struggling to meet TA rules, but DoD isn’t punishing them. Here’s why. (Military Times, 2019)

Thursday, July 4, 2019

US Departments of Education, Defense, and Veterans Affairs Shirk Responsibilities to Servicemembers, Veterans, and Their Families

As a military veteran working to expose some of the most predatory practices by subprime colleges, the idea that anyone at the US Department of Education, US Department of Defense (DOD) or Department of Veterans Affairs (VA) would say "Thank you for your service" rings hollow, especially on the 4th of July.

The US government has systematically shirked its oversight of subprime colleges that target servicemembers, veterans, and their families, especially during the Trump Administration.

I have to give some credit to President Obama for trying to do something against these schools, with Executive Order 13607, but much of that work has been undermined by DOD and VA officials.

I have filed a FOIA and a complaint about Waste, Fraud, and Abuse to DOD, but have been told not to hold my breath. And I have also filed a complaint with the VA, but have even less faith that they will do their job.

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.

Friday, February 9, 2024

The Student Loan Mess Updated: Debt as a Form of Social Control and Political Action

[Editor's note: The FY 2023 FSA Annual Report is here.]

In 2014, the father-son team of Joel Best and Eric Best published The Student Loan Mess: How Good Intentions Created a Trillion Dollar Problem. Their argument was that rising student loan debt posed a major social and economic problem in the United States, exceeding $1 trillion at the time of publication (predicted to reach $2 trillion by 2020). This "mess" resulted from a series of well-intentioned but flawed policies that focused on different aspects of the issue in isolation, ultimately creating unintended consequences.

Key Points of the 2014 book:

History of Federal Involvement: The book explored the evolution of federal student loan programs, highlighting how each policy change created new problems while attempting to address the previous ones.

Cost of College: Rising tuition fees along with readily available loans fueled the debt crisis, as students borrowed more to cope with increasing costs.

Repayment Challenges: The authors delved into the difficulties graduates face repaying their loans, including high interest rates, complex repayment plans, and limited income mobility.

Societal Impacts: The book examined the broader societal consequences of student loan debt, such as delayed homeownership, reduced entrepreneurship, and increased economic inequality.

Beyond the Mess: While acknowledging the complexity of the issue, the authors discussed potential solutions, including loan forgiveness programs, income-based repayment plans, and increased government regulation of for-profit colleges.

Overall, "The Student Loan Mess" provided a critical historical analysis of the factors contributing to the crisis and suggested pathways towards a more sustainable system of higher education financing.

Expansion of Federal Loan Programs (1960s-1990s):

The creation of federal loan programs initially aimed to increase access to higher education.

This led to rising tuition costs as universities saw guaranteed funding, with less pressure to remain affordable.

Loan eligibility expanded, encouraging more borrowing even without clear career prospects for graduates.

Cost Explosion and Predatory Lending (1990s-2000s):

College costs skyrocketed due to various factors, including decreased state funding and increased administrative spending.

Loan limits were raised, further fueling the debt increase.

Private lenders entered the market, offering aggressive marketing and deceptive practices, targeting vulnerable students.

Recession and Repayment Struggles (2008-present):

The Great Recession exacerbated loan burdens as graduates faced limited job opportunities and stagnant wages.

Complex repayment plans and high interest rates created a challenging landscape for borrowers.

The rise of for-profit colleges further complicated the issue, often saddling students with debt for degrees with low earning potential.

Growing Awareness, Advocacy, and Reform (2010s-present):

Public awareness of the student loan crisis grew, leading to increased advocacy and demands for reform.

Issues like predatory lending, debt forgiveness, and income-based repayment gained traction.

In 2010, the Health Care and Education Reconciliation Act made a significant change to the federal student loan system. Previously, the government guaranteed private loans, meaning it reimbursed lenders if borrowers defaulted. In turn, lenders received subsidies for participating. The Act ended these subsidies for private lenders, resulting in over $60 billion saved that could be reinvested in student aid programs.

Debates on the role of government and private lenders in financing higher education continued.

Next Chapters?

Since 2014, almost ten years after the Student Loan Mess was published, several major developments have unfolded concerning student loan debt:

Growth and Persistence:

Debt continues to climb: While the growth rate has slowed somewhat, outstanding student loan debt has surpassed $1.7 trillion and remains a significant burden for millions of borrowers.

Racial and socioeconomic disparities persist: African American and Latinx borrowers disproportionately hold a higher amount of debt compared to white borrowers, exacerbating economic inequalities.

Policy Changes:

https://x.com/The Biden-Harris administration has provided $136.6 billion in debt relief.

Expansion of income-driven repayment plans: Options like Income-Based Repayment (IBR) and Pay As You Earn (PAYE) have been expanded, allowing borrowers to adjust their monthly payments based on income.

Public Service Loan Forgiveness (PSLF) challenges: Legal uncertainties and administrative backlogs have plagued PSLF, leaving many public servants struggling to qualify for loan forgiveness.

Temporary pandemic relief: During the COVID-19 pandemic, federal student loan payments were paused and interest rates set to 0%. Payments resumed in 2023.

Debt cancellation debates: Proposals for broad-based student loan forgiveness have gained traction, with several Democratic lawmakers pushing for different cancellation amounts. However, these proposals have faced legal and political hurdles. In 2023, the 9th Circuit Court ruled in favor of mass cancellation of loans from predatory for-profit colleges (Sweet v Cardona). A few months later, the US Supreme Court struck down President Biden's plan for debt relief to more than 30 million Americans.

Increased attention to for-profit colleges and online program managers: Scrutiny of predatory practices and low graduate outcomes at for-profit institutions has intensified. Gainful employment rules have been reestablished, but whether they will be enforced is in question.

Looking forward:

The future of student loan debt remains uncertain. Key questions include:

Will broad-based loan forgiveness materialize?

Can income-driven repayment plans be made more effective?

How will future administrations address affordability and access to higher education?

What role will the private sector play in financing higher education?

How will declining enrollment numbers and skepticism about the value of higher education affect student loan debt and debt relief?

Will higher ed institutions be held accountable for the debt of their former students and alumni?

Can higher education reduce consumer costs and provide value to consumers and communities at the same time?

How will student loan debt affect disability, retirement, and life expectancy among long-term debtors?

Policy Drivers:

Economic factors: A strong economy could increase government revenue, potentially enabling broader debt forgiveness or increased funding for higher education access initiatives. Conversely, an economic downturn could make policy interventions more challenging.

Elections and political pressure: Public opinion and the results of future elections will influence the political will for reform. Continued activism and pressure from advocacy groups could sway policy decisions.

Legal challenges and court rulings: Lawsuits over debt cancellation programs and loan servicer practices could impact the legal landscape and shape future policy options.

Private sector involvement: Developments in the private student loan market and potential regulations of lending practices could affect access to credit and repayment options.

Consumer Decisions:

Debt burden and economic outlook: The level of outstanding debt and future job prospects will significantly influence borrower behavior. Increased debt loads could incentivize riskier repayment strategies or delaying major life decisions like homeownership.

Awareness and financial literacy: Improved understanding of loan terms, repayment options, and alternative financing methods could empower borrowers to make informed decisions.

Government programs and incentives: Changes to income-driven repayment plans, loan forgiveness programs, and other government initiatives will directly impact consumer choices about managing their debt.

Emerging Trends:

Alternative financing models: Innovations like income-share agreements and skills-based financing could disrupt traditional loan structures and offer new options for students.

Technology and automation: Increased use of technology to streamline loan management and repayment could improve efficiency and transparency.

Focus on affordability and value: As concerns about the value proposition of higher education grow, there might be a shift towards emphasizing affordable options and skills-based learning.

How does student loan debt affect the lives of Americans?

Student loan debt has a profound impact on the lives of millions of Americans in various ways, affecting not just their finances but also their major life decisions and overall well-being. Here's a breakdown of some key areas:

Financial Impact:

Burden of debt: The average graduate has over $40,000 in student loan debt, significantly impacting their monthly budget and disposable income. This can limit savings for retirement, emergencies, and major purchases like a house.

Lower credit scores: Missed payments or delinquencies can negatively affect credit scores, hindering access to future loans and increasing interest rates on other forms of credit.

Delayed milestones: High debt burdens may cause individuals to delay major life milestones like buying a home, getting married, starting a family, or pursuing further education due to financial constraints.

Career Choices:

Job dissatisfaction: To make loan payments, some graduates might feel pressured to stay in high-paying but unfulfilling jobs, sacrificing career satisfaction for financial stability.

Entrepreneurial risk: The fear of financial failure due to debt may discourage individuals from pursuing entrepreneurial ventures, hindering innovation and economic growth.

Limited career mobility: Debt may lock individuals into specific career paths based on earning potential, restricting their ability to pursue desired career changes.

Mental and Emotional Wellbeing:

Stress and anxiety: The constant pressure of debt repayment can lead to significant stress and anxiety, impacting mental and emotional well-being.

Lower self-esteem: Feelings of financial instability and hopelessness can negatively impact self-esteem and overall life satisfaction.

Stigma and discrimination: Some individuals may face social stigma associated with student loan debt, further exacerbating the emotional burden.

Societal Impact:

Economic inequality: Student loan debt disproportionately affects certain groups, like minorities and low-income students, perpetuating and widening economic inequality.

Lower homeownership rates: High debt burdens can hinder homeownership, negatively impacting the housing market and contributing to wealth disparities.

Reduced consumer spending: Debt-burdened individuals have less disposable income, limiting their purchasing power and affecting the overall economy.

Social Class and Student Loan Debt

There's a well-documented and intricate relationship between social class and student loan debt, characterized by significant inequalities and disparities. Here's a breakdown of some key points:

Higher burden on lower classes:

Borrowing rates: Individuals from lower socioeconomic backgrounds are more likely to borrow student loans due to limited family resources and higher college costs compared to their income.

Debt amounts: Borrowers from lower socioeconomic backgrounds often take on larger debt loads due to higher tuition fees and living expenses, often exceeding their earning potential after graduation.

Repayment challenges: They face greater difficulty repaying loans due to lower-paying jobs, making them more susceptible to delinquency and default. This hinders wealth accumulation and upward mobility.

Contributing factors:

Limited financial support: Lack of parental financial support or savings forces students from lower socioeconomic backgrounds to rely heavily on loans for college expenses.

Limited college options: Limited access to affordable, high-quality educational institutions often steers individuals towards for-profit colleges with deceptive practices and low graduation rates, leading to high debt with limited job prospects.

Ongoing Debate

There is ongoing debate on solutions to address the student loan crisis, with proposals ranging from broad-based loan forgiveness to reforms in higher education financing and income-driven repayment plans. The future of student loan debt and its impact on Americans remains uncertain and depends on various factors, including policy decisions, economic trends, and individual financial choices.

The Student Loan Debt Movement

There has been an organized effort for student loan debt relief since the 2010s. This movement, using direct action, lawsuits, and lobbying has had some gains, putting pressure for accountability for schools that use predatory practices--and getting debt relief for hundreds of thousands of debtors. The most notable organization has been the Debt Collective.

Image of Ann Bowers, courtesy of the Debt Collective

There have been legal allies too, such as the Harvard Project on Predatory Student Lending (PPSL) and the Student Borrower Protection Center (SBPC).

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)

Resistance to Debt Relief

The reasons why some people might not support student loan forgiveness. Some conservatives believe that it is unfair to forgive the debts of those who willingly took out loans, while others believe that it would be a waste of taxpayer money. Additionally, some believe that student loan forgiveness would not address the root causes of the problem, such as the high cost of tuition.

It is important to note that not all conservatives oppose student loan forgiveness. Some support income-based repayment plans or public service loan forgiveness. Additionally, some believe the government should focus on making college more affordable, rather than simply forgiving existing debt.

According to a 2019 poll by the Pew Research Center, 54% of Republicans and Republican-leaning independents opposed forgiving all student loan debt, while 37% supported it.

Student Loan Debt Power Analysis: Who Benefits from Inaction?

There are elites and elite organizations who are (at least on the backstage) against student loan debt relief: student loan servicers (e.g. Maximus, Nelnet, Navient, and Sallie Mae), big banks, large corporations, and the US military. For them, debt serves as a way to get others to do their bidding. Debt is essential as a leverage tool to recruit and retain workers. Debt relief could also create more competition for better, more meaningful jobs, which some elites may not want for their children. States may be unwilling or unable to further subsidize higher education if elites are unwilling to pay. This situation is likely to worsen as Medicaid budgets are used for a growing number of elderly and increasingly disabled Baby Boomers.

People's Rally for Student Debt Cancellation to be held outside Supreme Court, February 28, 2023

Department of Education: Over half of federal student loan borrowers were not paying before Pandemic (Alan Collinge)

Student Loans and a Brutal Lifetime of Debt (Dahn Shaulis and Glen McGhee)

Maximus, Student Loan Debt, and the Poverty Industrial Complex

SLABS: The Soylent Green of US Higher Education

I Went on Strike to Cancel My Student Debt and Won. Every Debtor Deserves the Same. (Ann Bowers)

An Email of Concern to the People of Arkansas about the University of Phoenix (Tarah Gramza)

Higher Education FOIA Requests to US Department of Education

Friday, September 15, 2023

Fraud Claims Against University of Phoenix Continue to Grow

The Higher Education Inquirer received a FOIA response today from the US Department of Education stating that 73,740 consumer fraud claims have been filed against the University of Phoenix. These claims have been made through the Department of Education's Borrower Defense to Repayment program.

The Sweet v Cardona lawsuit, concluded earlier in 2023, allowed for about 19,000 claims to be settled immediately--in favor of student debtors and against the University of Phoenix. Another 15,000 or so cases are supposed to be expedited as a result of the federal ruling.

23-02373-F Final Response

We estimate that the potential liability of these immediate claims to be $200M-$600M with another $500M-$1.5B for the remaining cases. The higher estimates are based on the median federal loan debt among borrowers who completed their undergraduate degree ($32,421) and a study by Adam Looney and Constantine Yannelis that indicated University of Phoenix debtors, on average, paid off almost nothing of their principal. The authors also estimated that total student loan debt from more than a million University of Phoenix debtors was $35B.

The Department of Education has not presented any estimates on the total debt by University of Phoenix students or its costs to the US government.

Thousands of new cases continue to be filed. From January 2015 through January 1, 2022, there were 32,040 Borrower Defense claims made against the University of Phoenix. An additional 41,700 claims were filed between 2022 and August 2023.

Idaho Sale

University of Phoenix's current owners are Apollo Global Management and Vistria Group, who have been trying to unload the online robocollege for years. The University of Idaho has been the most recent target, but the sale is far from being consummated. The entire deal is expected to cost $685M. Idaho Attorney General Raul Labrador has filed a lawsuit to stop or at least slow down the acquisition. And members of the Idaho Legislature continue to have questions.

In order to shield itself from liability the University of Idaho created a non-profit organization called 43 Education. But the state university may be responsible if the non-profit fails to make enough money to repay the bondholders of the new non-profit.

The liability of these Borrower Defense claims to the current or future owners of the University of Phoenix seems possible in light of a recent statement by Department of Education Undersecretary James Kvaal. Kvaal said the University of Arizona Global Campus may be liable for the misdeeds of Ashford University (UAGC's former name). The University of Arizona purchased Ashford in 2020 for one dollar.

Feds Cancel Loans for 2,300 Students Scammed by Ashford U. So Why Does the School Still Get Tax Dollars? (David Halperin)

University of Phoenix and the Ash Heap of Higher Ed History

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

The Growth of "RoboColleges" and "Robostudents"

More Transparency About the Student Debt Portfolio Is Needed: Student Debt By Institution

Friday, July 12, 2024

Pending HEI Investigations

The Higher Education Inquirer (HEI) is working on a number of investigative projects. They include:

(1) Maximus is the sole contractor for the US Department of Education's Default Resolution Group (DRG) and its "Fresh Start" program. The DRG contract is set to expire, and information about their contract appears to have been removed from public view. DRG is likely to face more problems as defaults are expected to rise dramatically in late 2024.

(2) Subprime scholarship at America's largest online robocolleges, including Liberty University's online doctoral degrees in history and philosophy. We are communicating with subject matter experts to determine the extent of the problem.

(3) Our 6 1/2 year battle to obtain information about bad actors receiving Department of Defense Tuition Assistance (TA).

Approximately $600 million in tuition assistance each year is managed by DOD VOL ED and its contractors. About 100,000 servicemembers each year use TA benefits to pay for continuing education, and a disproportionate amount goes to robocolleges.

In 2017, as a continuation of Obama-era policies, contractors PwC and Gatehouse compiled a list of the 50 worst offenders, schools that were violating DOD MOU and President Obama's Principles of Excellence (Executive Order 13607).

Under President Trump, DOD refused to name the bad actors and did not punish anyone for their violations. In 2018, DOD education program analyst Anthony Clarke said that DOD did not want to create a "witch hunt." After 2019, the oversight program fell under the radar.

The University of Phoenix was implicated in a number of violations, but there is no record that DOD did anything to correct the situation, other than to reprimand at least one base commander. DOD has had a long-term relationship with predatory subprime colleges for years through the Council of College and Military Educators (CCME).

DOD has a current contract with Purdue University Global offering degrees of questionable academic value.

HEI has spent a great effort communicating with DOD officials, whistleblowers, and political aides, and following up with information that first appeared in in the Military Times in 2018 and 2019, then reappeared in 2024. We are also awaiting a substantive response from DOD FOIA 22-1203-F submitted in July 2022 that has received multiple delays and is not expected to be answered until October 4, 2024, about 1 month before the US federal elections.

Articles About Robocolleges

Articles About DOD Tuition Assistance