for-profit colleges

My Student Loan Truth: Theresa’s Brooks Institute Story

When Theresa graduated from the Brooks Institute in 2006, she never imagined that she would find herself suing the U.S. Department of Education years later over her student loan debt. But after being cheated by her school and years of waiting for answers, she is a plaintiff in Sweet v DeVos – representing over 158,000 students who were cheated by their schools and have been ignored by Betsy DeVos and the U.S. Department of Education. This is her story.

 

My name is Theresa Sweet.

On the day I graduated from college, my fellow students and I were lined up in a cordoned off area, under the perfect Santa Barbara sun, waiting to enter the theater and accept our diplomas. Myself and several other students turned our heads toward a commotion beyond the ropes only to see an exasperated administrator tailing my father, sternly telling him that he needed to wait until after the ceremony to speak with his student. My mounting concern quickly turned to laughter when he hurried over, gave me a quick hug, and said, “I just wanted to tell you again how proud I am of you.” That moment remains among a literal handful of times in my life that I ever saw my father cry.

While The Brooks Institute (then owned by Career Education Corporation) is no longer in operation, I know that there are plenty of predatory, for profit trade schools still operating in California today. I am here today to share my story in the hope that I can prevent others from living through a similar experience.

I attended the Brooks Institute of Photography in Santa Barbara and Ventura, CA from January 2003 to June 2006, graduating with a Bachelor of Arts in Professional Photography. Once a source of pride, my education quickly became a ruinous source of personal and financial stress.

Since graduation, I have never had a job where I used the education I received at Brooks. I have never had a job that has helped me earn an income that is remotely close to what is necessary to pay off these loans. I can’t finance a car, much less a home. It is unlikely that I will ever be able to marry or adopt children as I would essentially be condemning my family to a lifetime of poverty.

I currently work as a Certified Nursing Assistant, and I would love to be able to further my education and obtain a Nursing degree. Unfortunately, Brooks, like so many other for-profits, actively misled students as to the transferability of the course credits they earned. In addition, Brooks also made sure to guide students to borrow the maximum amount of Federal Student Loans allowed in pursuit of a Bachelor’s Degree, making me ineligible for student loans and financial aid to pursue nursing.

Brooks used unethical, high pressure sales tactics such as pain points about me being the first person in my immediate family to attend and graduate from college. They relied on the fact that there was no one in my life who could help me ask the right questions. They made a point of never answering questions via email, only over the phone. They created the false impression that the admissions process was competitive when, in fact, all they cared about what getting the maximum number of students enrolled and filling out student loans applications. In reality, Brooks admitted anyone with a high school diploma or a GED, as long as that person could get a student loan.

Although I had no way of knowing it at the time, after I graduated I found out that the “Admissions Counselors” were just commissioned sales people. They weren’t paid to give me accurate information about the school, to tell me how much it could cost me, or to counsel me on whether the school would help me reach my goals. They were only paid to get me to enroll.

After graduation, the “Career Services” office regularly contacted me with financially meaningless opportunities for unpaid jobs that they found on the local Craigslist page.

Perhaps worst of all, Admissions Counselors blatantly lied about the employment rates of students after graduation as well as the amount of money these graduates were making, knowing that the lies they were telling were giving students false impression that they would be able to pay back their student loans. You wouldn’t have to look very hard to find evidence of all of this.

In short, while I worked multiple jobs to stay at school, Brooks and CEC were happily raking profits by defrauding thousands of students. And NO ONE was stopping them. No one was alerting the public or prospective students. No one was there to help any of us recoup our financial losses, to say nothing of the disastrous effect this high level of debt has on personal relationships.

If this seems outrageous to you, GOOD! It is outrageous, and it isn’t hyperbole. There are hundreds of former Brooks Students who have already filed Borrowers Defense to Repayment claims, and that number is sure to grow. I filed my own paperwork in 2016. I’ve been waiting for a response for three years. It is one of 158,110 applications that sits at the Department of Education unanswered right now.

The Department of Education is determined to sit on their hands, doing nothing to help. So us students have been forced to turn to the courts for justice. We are done waiting.

 

By Theresa Sweet

 

Learn more about the lawsuit Sweet v DeVos

Servicers Are Wrongly Denying Closed School Discharges to Art Institute of Phoenix Students. Why?

In December 2018, scores of Art Institute campuses closed their doors. Before the closure, students got three options: (1) transfer to another Art Institute campus to complete their degree, (2) participate in a teach-out at a different school to complete their degree, or (3) request a closed school discharge of their federal student loans. Borrowers are eligible for a closed school discharge as long as they didn’t complete their program or transfer credits to a comparable program and were enrolled within 120 days of the schools’ closure date—in this case, December 14, 2018.

Students who wanted to discharge their loans—and move on with their lives—had a plan. That is, until some students tried applying for a closed school discharge.

Some Art Institute of Phoenix students who were enrolled in the school within 120 days of the school’s closure have reported that their servicers are denying their application for a closed school discharge. The servicers have claimed that, because the Art Institute of Las Vegas remains open, Art Institute of Phoenix students are ineligible for a closed school discharge.

One student received the following response from their servicer:

Our records indicate that the main campus of ART INSTITUTE OF PHOENIX, also known as formally known as ART INSTITUTE OF LAS VEGAS remains open. As the main campus is still open, you do not qualify for School Closure discharge. If the main campus has in fact closed, you must provide proof. Proof must be on school letterhead.

This is wrong. The Art Institute of Phoenix was a “branch campus” of the Art Institute of Las Vegas, but just because Art Institute Las Vegas remains open does not mean Art Institute of Phoenix students are ineligible for closed school discharge.

Art Institute of Phoenix students can discharge their federal student debt because their school closed. Federal regulations governing closed school discharge say that “‘school’ means a school’s main campus or any location or branch of the main campus, regardless of whether the school or its location or branch is considered eligible.” That means that if a branch campus closes and the main campus remains open, students from the branch campus are eligible for closed school discharge. The Art Institute of Phoenix is (and was) recognized by the Department as a branch campus of the Art Institute of Las Vegas. So, even though the Art Institute of Las Vegas remains open, students from the Art Institute of Phoenix are eligible for closed school discharge (as long as they didn’t finish and attended the school within 120 days of December 14, 2018).

So what gives? And why isn’t the Department intervening to fix it?

We aren’t sure why servicers are misinforming students. The Department of Education’s official record (.xlsx) of closed schools shows that the Art Institute of Phoenix campus closed on December 14, 2018. Therefore, students who didn’t complete their program or transfer their credits to a comparable program and were enrolled in Art Institute of Phoenix after August 16, 2018 are eligible for closed school discharge.

One possible explanation for some servicers’ wrongful closed school discharge denials may stem from the inaccurate information the Department itself has distributed. In its information page regarding closed Argosy and Art Institute schools, the Department of Education listed the closure date of 24 Argosy and Art Institute campuses—including the Art Institute of Phoenix—as March 8, 2019.

What should you do if you attended the Art Institute of Phoenix and your servicer denies your application for a closed school discharge?

If your loan servicer tells you are denied for closed school discharge, even though you 1) were enrolled in the Art Institute of Phoenix after August 16, 2018 (and did not graduate), 2) did not participate in a teach-out, and 3) did not transfer credits to another similar program at another institution, you should call your servicer and tell them that:

1) You are eligible for closed school discharge because you were enrolled at the Art Institute of Phoenix and did not transfer to the Art Institute of Las Vegas;
2) The closure of the Art Institute of Phoenix, as a branch campus of Las Vegas, makes you eligible for closed school discharge according to Department of Education regulation;
3) The fact that the Art Institute of Las Vegas is still open does not impact your eligibility for closed school discharge because you never attended that campus;
4) The Postsecondary Education Participant’s System’s Closed School List shows that the Art Institute of Phoenix closed on December 14, 2018, and you were enrolled within 120 days of that date and did not complete your program.

If your servicer does not change their response, you should call your servicers’ ombudsman (normally you can find their contact information on your servicer’s website). You should explain that your servicer is rejecting your request for a closed school discharge, and provide the four reasons above that your servicer is wrong. If that doesn’t work, you should call the Federal Student Aid Ombudsman at 1-877-557-2575.

Project on Predatory Student Lending Hiring a Racial Justice Fellow

The Project on Predatory Student Lending is excited to announce a one-year fellowship! The racial justice fellow will develop cutting-edge litigation to combat the discriminatory efforts of current higher education policies, and lead outreach efforts by engaging with existing clients and community partners and forging new partnerships with communities impacted by the predatory for-profit industry.

For more information and to apply to the position, click here.

For more information on for-profit colleges and racial justice, click here.

Partial Borrower Defense Denials Violate Due Process, Privacy Act: Injunction Sought Against DeVos, Department of Education

A court filing over the weekend revealed that the U.S. Department of Education secretly, illegally, and unconstitutionally used Social Security data to deny loan discharges to students cheated by Corinthian Colleges, Inc. Four borrowers, on behalf of a nation-wide class, seek an injunction to block the administration from applying its recently-announced plan to partially deny student loan relief to which defrauded borrowers are entitled, and that the Department had previously provided to certain cohorts of Corinthian borrowers through the borrower defense application process set up by the Department.

The motion for an injunction and amended complaint were filed in federal court in California as part of a class-action lawsuit brought by the former students of Corinthian-owned for-profit colleges. The borrowers and the putative class are represented by the Project on Predatory Student Lending of the Legal Services of Harvard Law School and Housing and Economic Rights Advocates.

“The Department of Education had already unfairly and unlawfully refused to cancel these bogus loans for so long,” Project on Predatory Lending attorney Joshua Rovenger said. “Now, it has secretly and illegally coopted Social Security data to try to argue for something less than the complete cancellation and refund that these borrowers are due. We are seeking to rescind these illegal partial denial notices that never should have been issued in the first place.”

Earlier this month, the Department notified certain former students that, because their “average earnings” were not less than half of the “average earnings” of some unspecified group of students who went to a different, non-Corinthian school, they must repay their loans. In coming up with this murky and convoluted calculation, the Department secretly and illegally gathered information about borrowers’ earnings from the Social Security Administration. Perversely, the Department obtained the data from SSA pursuant to an information sharing agreement entered into for the purpose of protecting the public at large from predatory institutions like Corinthian by publishing “gainful employment” metrics.

“This ‘average earnings rule’ is not only a theft of data, but more importantly, it is a fact-free attempt by the Department of Education to double cross borrowers who were scammed by Corinthian and then waited months or even years for the relief that the Department promised them,” said Noah Zinner, an attorney at Housing and Economic Rights Advocates who is representing plaintiffs.

For borrowers who were scammed by Corinthian and then waited months or even years for the relief that the Department promised them, the “average earnings rule” is yet another government-inflicted intensification of Corinthian’s harms.

One of the named plaintiffs representing the nation-wide class is Jennifer Craig of Baldwin Park, California. She attended a medical billing and coding program at the Corinthian-operated Everest College—City of Industry. Recruiters convinced her to enroll in the program with assurances that she would get a job, using falsified job placement statistics. Despite completing the program, she has never been able to get a job as a medical biller. She has only been able to get the same minimum-wage jobs that she worked at before going to Everest. She applied for cancellation of her loans in 2016, using an “attestation form” that the Department of Education created especially for Corinthian borrowers. Last week, she was informed by email (included in the filing) that the Department had applied its “average earnings” calculation, and she must repay 80% of her loans. She and her husband, who lost his job earlier this year, are barely able to make ends meet. They have three children, including a three-month old daughter.

Another family impacted by the Department’s actions are Zovinar Tchouldjian and Alina Farjian of Los Angeles. Alina, who submitted a declaration in support of the motion for preliminary injunction, attended Everest in Receda for medical assisting. Her mother, Zovinar, borrowed Parent PLUS loans to help pay for the program, despite her reservations that the school could support her daughter, who was in special education programs throughout her schooling. They were convinced by the job placement rates that Everest recruiters showed them. Alina has never worked as a medical assistant. She currently drives for Lyft. Both Zovinar and Alina applied to the Department for loan cancellation. Zovinar’s loans were completely cancelled months ago. Alina learned last week that the Department had used its “average earnings” rule to determine that she must repay 70% of her loan.

The plaintiffs are asking the court to order the Department to stop applying the Average Earnings Rule; to keep applying the Job Placement Rate Rule by granting complete relief to borrowers in the findings cohort; and to rescind the partial denials it has issued. The Department’s current conduct is illegal in numerous ways, including:

  • The Department’s failure to explain its rationale, its inability to provide borrowers with the data underpinning its calculations, and its illogical reliance on this data to decide individual claims violate the Due Process Clause of the Constitution and is arbitrary and capricious;
  • The Department’s capricious adoption of the Average Earnings Rule constitutes impermissible retroactive rulemaking in violation of the Administrative Procedure Act;
  • The Department’s abandonment of the Job Placement Rate Rule is arbitrary and capricious and denies class members the relief they have been promised and on which they relied; and
  • The Department’s use of average earnings violates the Privacy Act by secretly and unfairly deploying individuals’ information to determine their rights.

Massachusetts Senator Elizabeth Warren raised flags in January about the Department’s misuse of Social Security data in a letter to the Department’s Inspector General, asking for an investigation into the use of earnings data to make decisions on partial relief for defrauded student loan borrowers.

The borrowers and the putative class are represented by the Project on Predatory Student Lending of the Legal Services of Harvard Law School and Housing and Economic Rights Advocates. The First Amended Complaint is posted here, and the Motion for a Preliminary Injunction here.

About HERA

Housing and Economic Rights Advocates (HERA) is a California statewide, not-for-profit legal service and advocacy organization dedicated to helping Californians — particularly those most vulnerable — build a safe, sound financial future, free of discrimination and economic abuses, in all aspects of household financial concerns. It provides free legal services, consumer workshops, training for professionals and community organizing support, create innovative solutions and engage in policy work locally, statewide and nationally.

About the Project on Predatory Student Lending

Established in 2012, the Project on Predatory Student Lending represents former students of the predatory for-profit college industry. Its mission is to litigate to make it legally and financially impossible for the for-profit college industry to cheat students, and to relieve borrowers from fraudulent student loan debt.

The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt. It has also brought its clients’ experiences to bear on federal and state policymaking.

Court Orders Department of Education to Consider Student Loan Relief Application, Calling Request for Further Delay “Frivolous and in Bad Faith”

The United States District Court for the Central District of California issued an Order today that directs the Department of Education to rule on the loan relief application of a former Corinthian student that has been pending for over two years.  To date, the Department of Education has not ruled on thousands of applications for loan relief submitted by borrowers whose federal student loans were originated by private banks under the Federal Family Education Loan Program.

The Plaintiff, Sarah Dieffenbacher, filed her first application for loan relief in March 2015. Her loans went into default while her application was still pending.  In late 2016, Sarah received a notice that her wages would be garnished. She works as a home health care phlebotomist to support herself and her four children. She objected to the wage garnishment because the terms of her loan and federal law both provide that Corinthian’s fraudulent actions render her loans unenforceable. She asked the Department to hold the hearing on her objections to which she was entitled.

After the Department of Education overruled her objection, citing the fact that her file included a signed loan contract, and ordered the garnishment to go forward, Sarah filed a lawsuit against the Department in March.  Represented by the Project on Predatory Student Lending of the Legal Services Center of Harvard Law School, she argued that the Department did not consider the arguments or evidence she presented before rejecting her claim. As the Court noted, her application was supported by 254 pages of exhibits, which included a sworn statement from Sarah as well as records from the Attorney General of California regarding documented misconduct on the part of Everest and its parent company.  The Department also did not provide Sarah with the requested hearing before issuing a summary denial.

In response to the lawsuit, the Department filed a motion asking that the Court refrain from examining the case altogether.  The Court ruled that this request was not based on a “substantial or legitimate concern” but rather was “both frivolous and in bad faith,” and “appears to be an attempt to evade judicial review so that it can retain the ability to garnish Plaintiff’s wages without a conclusive ruling as to the enforceability of her loans.”  Under the ruling, the Department now has ninety days to provide Sarah with a conclusive ruling on her application for loan relief.  Responding to the ruling, Sarah said, “I’m fighting for myself, but also for so many others who were defrauded by for-profit schools.  I hope this case will put pressure on the Department to do the right thing.”

This ruling comes amidst growing concern that the Department of Education is refusing to take actions required by law and its own regulations designed to wipe out student loan debts that are the product of fraud and illegal activity by predatory schools.  Tens of thousands of applications for relief based on the fraud of Corinthian and other for-profit schools have been pending with the Department for months and even years.  “Today’s ruling confirms that student loan borrowers have rights that exist independently of political winds and caprices.  It is inexcusable to delay and thereby deny Sarah and other borrowers in similar positions their contractual and statutory rights,” said Toby Merrill, director of the Project on Predatory Student Lending and one of the lawyers representing Sarah.

Additional Information

Ms. Dieffenbacher is also represented by Alec Harris, Eileen Connor, and Deanne Loonin of the Project on Predatory Student Lending of the Legal Services Center of Harvard Law School, as well as Robyn Smith of the Legal Aid Foundation of Los Angeles.

Click here for a copy of the Court’s Order.

Click here for the Project’s press release about the Order.

Press Coverage: Little for Students in ‘Historic’ Settlement of Education Management Case, Chronicle of Higher Education

The Chronicle of Higher Education

November 17, 2015

Little for Students in ‘Historic’ Settlement of Education Management Case

by Goldie Blumenstyk

In exchange for having broken laws, “the company agrees not to break the law going forward? None of this sounds like remedy to me,” said Toby Merrill, director of the Project on Predatory Student Lending, at Harvard Law School. “The company has taken billions of federal funding and distributed that to its executives and shareholders,” but students will see very little of it, Ms. Merrill said.

Read the full article here.

Project on Predatory Student Lending Releases Poster Explaining Rights and Options of Students Who Attended Closed Everest Schools

Corinthian Poster FINAL.webLSC’s Project on Predatory Student Lending, along with the National Consumer Law Center’s Student Loan Borrower Assistance Project, released a poster showing rights and options of students at the two Massachusetts Everest schools, as well as other Corinthian-owned schools that closed or are in the process of closing.

For-Profit Corinthian Colleges agreed to shut down operations and sell many of its campuses. Prior to that agreement, the Massachusetts Attorney General sued the schools for taking advantage of students with high-pressure and deceptive recruiting, and misleading students about the value of the schools’ services and career preparation and opportunities in order to boost profits at students’ expense.

The shut-down agreement is complicated, and it continues to be difficult for Everest students who struggle with large debts and few employment prospects to figure out their best options. The poster displays options for students at the schools that have closed or will close.  The options for students at schools that continue to operate, either under Corinthian’s ownership or under other ownership, are more limited.

A downloadable pdf of the poster is available here.

LSC’s Project on Predatory Student Lending Featured on German Public Television

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The Project on Predatory Student Lending was recently featured on Welstpiegel (“World Mirror”), the Sunday evening newsmagazine of ARD Television, the largest national public broadcaster in Germany.  The segment (video) features the Project’s clinical students holding a meeting at LSC, as well as an interview with Toby Merrill, the Project’s director. The segment begins with footage recorded outside of LSC’s building at 2:14. A transcript of the story is also available (in German).

WGBH: For-Profit Colleges’ Methods Under Fire


Massachusetts is joining a growing number of states that want to better regulate for-profit colleges like DeVry, the University of Phoenix, and the Brookline-based Art Institute of New England to prevent aggressive recruiting of people who can’t afford to spend upwards of $40,000 a year on tuition and fees. The attorney general’s office is taking testimony this week on new rules that would strengthen oversight of colleges that don’t have tax-exempt status and rely on tuition and stock market investors. Guests:

Toby Merrill represents low-income student loan borrowers. She testified on Tuesday before the attorney general’s office.

Commonwealth Magazine: A check on bad student loan debt

Last year, federal education officials did something they almost never do: They wrote off more than $3 million in student loan debt belonging to nearly 500 students. Short of dying or paying them off, students almost never shed their college debt, even through bankruptcy. Yet the 500 students managed to convince the federal government that their loan providers had been duped into giving them the money illegally as part of a scheme by some colleges to take advantage of the federal government’s guaranteed loan program. … Toby Merrill, an attorney at the Legal Services Center of Harvard Law School who deals with predatory lending issues for low-income people, says the majority of clients she deals with on bad student loans fall under the category of not qualifying for loans because of a lack of a high school diploma. But even then, she says, a student has to jump through hoops to show they were approved to enter their school without the proper credentials.
“Very few people have all their loan documents,” says Merrill. “The burden is not just high, it’s wrongly placed. The department is skeptical of such applications and requires volumes of documentation. Your say-so as a student is not enough.”