On July 1, 2020 the Department of Education’s newest borrower defense rules went into effect and made it much harder for defrauded borrowers to get loan relief. The Department of Education falsely claimed that it needed new rules to guard against students’ “frivolous” claims, even though it provided no evidence that students were submitting frivolous claims. The newest borrower defense regulations needlessly make it extremely difficult for students to show that their school scammed them and make it very hard for borrowers to successfully discharge their federal student loans.
Since the Department of Education won’t protect students once their school has scammed them, students—particularly students at for-profit colleges—need to take steps to protect themselves against the possibility of school misconduct. This post describes some measures students can take to protect themselves and increase the likelihood that they will be able to attain relief if their school misleads them.
If you are taking out federal student loans after July 1, 2020:
Of course, no one wants to think that they are attending a school that has lied to them. However, many students discover after they graduate that something their school said to convince them to enroll was not true. The Department has said that it will no longer accept sworn statements from students, alone, to show that a school lied or failed to tell them something critical.
Because the Department has imposed such difficult standards, keep all promotional materials that the school distributes–especially from admissions and financial aid staff. Under the new rule, written documentation from the school is more important than ever. You should keep all written materials and correspondence from your school just in case you later discover that your school was not being fully truthful. Keep all emails from school employees as well. When a school has lied, it can be difficult to get the evidence to show this later.
If you are thinking about stopping your attendance at a school because it misled you:
It can be very difficult to get schools to provide documentation needed to apply for jobs or to demonstrate the school lied once you have left. Additionally, the Department of Education has said it will not stop schools from withholding students’ transcripts or refusing to verify attendance (although schools may be prohibited from doing so under state law) after it grants a borrower defense. If you decide that you will no longer be attending your school, or that you will submit a borrower defense after graduation, make sure that you request several official copies of your transcript. If you are intending to submit a borrower defense application, make sure you have all the documentation from the school that you may need for a job application.
If you think your school might have lied, misled, or cheated you:
Do not wait to get legal help if you think your school has scammed you. Under the rule, you only have three years to submit a borrower defense application to the Department of Education after you stopped attending the school if you borrowed a loan after July 1, 2020.
If you want to enroll in a college, university, or trade school, but you want to weed out schools that are shady, consider the following:
Just because a school is eligible to receive federal student aid does not mean it does not mislead or scam students. As a Congressional report demonstrated in 2012, for-profit colleges have a history of defrauding students even though the Department of Education allowed them to receive federal student loans.
However, it is tough for a student to assess the value or quality of the education a school provides because there is limited public data available regarding how the school operates its programs or the results of the school’s graduates. Limited data on schools’ operations is published by the Department of Education here.
That being said, here are a few tell-tale signs that indicate that a school may be misleading students:
- School employees are rushing you to enroll in classes. In the past, predatory schools have attempted to rush students into enrolling so that they would override any hesitation they had regarding their school. You should consider all of your options when enrolling in school— do not let yourself be rushed into taking on a substantial purchase!
- The school is assuring you that credits are transferable to other schools. Generally, unless there is a special agreement between schools, credits are often not transferable. Call other schools to verify that credits obtained at the school you are considering are transferable to other institutions.
- The school is promising that you will get a job with a particular employer after graduation. In the past, predatory schools have lied to students about the likelihood of employment after graduation. Ask to see the agreement between the school and the employer guaranteeing employment. Call the employer to verify that they guarantee that they will hire graduates from a particular school.
- The school representative is telling you that you will receive scholarships to cover tuition but then asks you to complete loan contracts. In the past, predatory schools have taken advantage of students’ unawareness of the financial aid process to trap them with student loan debt.
Additionally, predatory schools have been known to hide critical information in their enrollment materials and prevent students from reading them. Do not agree to sign anything that is not true or that you do not understand. Do not sign any agreements if what the school representative is telling you is different from what is written in the contract.
Because the Department has created a standard that makes it so difficult for students to show they were scammed by their school, documentation will be extremely helpful if you run into trouble in the future. Keep a folder with all promotional materials, emails, or other communications you had with the school when you were enrolling in the program. Make sure you keep a copy of any contract the school makes you sign. If you can, try and take a picture of any advertisements you saw regarding the program you were interested in. That way if you do run into problems, you will already have some of the evidence to prove that you are entitled to a loan discharge.
Have you been targeted by a predatory school? Share your story here.