Last week, the New York Attorney General announced a ground-breaking settlement with Career Education Corp., one of the largest for-profit colleges in the U.S. This settlement highlights the crucial role that state law enforcement agencies play in protecting students from for-profit college deception. Too many states have abdicated their consumer protection role, leaving many non-traditional and low-income students – working parents, veterans, non-English speakers, and older people who need new job skills because of today’s rapidly changing job market – at the mercy of for-profit colleges that prey on their dreams and mislead them about their job prospects after graduation.
The New York AG is one of many states attorneys general who are increasingly cracking down on for-profit college deception. Attorney General Schneiderman has taken action to protect students on several fronts, including by filing a lawsuit that alleges that an educational institution, The Trump Entrepreneur Institute, was unlicensed, unaccredited, non-federally funded and engaged in deceptive business practices. Students who finance their educations with non-governmental funds, such as private student’s loans, hard-earned savings, credit cards, or loans from family or friends, are equally deserving of protection from state oversight agencies.
New York’s $9.25 million student restitution fund in the Career Education Corp. case is the largest obtained by any AG in recent years and will provide much needed relief to many former CEC students. Unfortunately, it will not be enough to wipe out their student loans. Attorney General Schneiderman gathered evidence of widespread deception at New York CEC campuses that goes to the heart of why students enrolled – to obtain the skills necessary to earn higher wages and improve the lives of their families. The reality is, however, that most of these students have only earned high student loan debt and no ability to earn the higher wages necessary to pay it back. We therefore urge the Department of Education to rely on this evidence and grant students covered by the settlement a complete discharge of their student loans.
The Department could, for example, use its statutory authority to grant false certification discharges to students who enrolled in programs that lacked the programmatic accreditation required for licensing or credential exams. Similarly, the Department could use its broad statutory settlement and compromise authority to discharge debts for the students who enrolled in programs with inflated job placement rates. Such discharges will provide each student with a fresh start and an opportunity to re-enroll at a college that will provide a quality education.
Ultimately, oversight agencies should ensure that hardworking non-traditional students who invest in their future by taking on large government loans or by using other sources of funds, such as private student loans or savings, are able to obtain a quality education wherever they go to school. Moreover, for too long the risk of predatory for-profit college practices has fallen almost entirely on individual borrowers, who are not in a position to police colleges or discover fraud before they enroll. We applaud the New York Attorney General for taking action and hope the Department of Education will take this opportunity to create a fresh start relief program for harmed students, starting with the students who are covered by the New York Attorney General’s settlement with CEC.