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For-profit college students make a last-ditch attempt at faster debt relief

By DANIELLE DOUGLAS-GABRIEL | The Washington Post | Published: December 5, 2016

A coalition of people who say they were defrauded by Corinthian Colleges, ITT Technical Institutes, Art Institutes and other for-profit colleges are urging the Obama administration to cancel their debt before Donald Trump takes office.

The group worries that the president-elect will end efforts to discharge the federal student loans of tens of thousands of former for-profit college students who have been fighting for debt relief for years. Trump's ties to for-profit real estate seminars, the subject of a $25 million fraud settlement, has them convinced that his rise to power puts their chances at loan forgiveness in jeopardy. His transition team did not respond to requests for comment.

"I'm really afraid that all of this work will be for nothing," said Nathan Hornes, 26, who graduated from Everest College in Ontario, Calif., operated by for-profit chain Corinthian Colleges. "But I'm hopeful that there will be some sort of resolution before that happens."

It has been two years since Hornes applied for "borrower defense to repayment," a government program that wipes away federal loans if a school used illegal or deceptive tactics to persuade students to borrow money for college. He said the nearly $70,000 in loans he amassed studying business management are still under review, even though the Education Department has evidence that his school and other Corinthian campuses committed fraud by misrepresenting job placement rates.

"I've called the hotline, and all I'm told is there's really not much they can do, you have to wait," Hornes said. "They just don't seem to care. [The Education Department] knows that the school was fraudulent because they filed all of these charges, slapped them with all of these fines."

Before it shut down last year, Corinthian, which ran Everest Institute, WyoTech and Heald College, became an example of the worst practices in the for-profit education sector, with high loan defaults, predatory lending and dubious programs. Education officials kicked the school out of the federal financial aid program in 2014 for lying about its graduation rates, forcing the company to sell or close its schools.

The collapse of Corinthian ushered in a flood of defense claims at the Education Department. The shortcomings of the claims process emerged when 15 former Corinthian students, including Hornes, refused to repay their student loans to pressure the government into making it easier for people harmed by colleges to get debt relief.

The movement gained the support of dozens of state attorneys general and federal lawmakers, and ultimately culminated in the Obama administration overhauling the claims process. Education officials finalized a new standard to judge appeals for debt relief and streamline the claims process at the end of October.

"We remain steadfast in our commitment to providing debt relief to eligible borrowers, and we have already substantially increased our pace of processing discharge claims for those who believe they have a defense to repayment," said Kelly Leon, a spokeswoman for the Education Department.

Of the 82,000 claims received by the Education Department as of early October, only 19 percent have been approved and just those filed by Corinthian students. Only one of the 15 "debt strikers" has received relief to date, according to the Debt Collective, an offshoot of the Occupy Wall Street movement working with the strikers.

"Every once in a while somebody will pop up in our Facebook group and say they've received a letter that their debt has been canceled, but it's very rare," said Ann Larson, a Debt Collective organizer. "We're in a desperate situation to get this debt canceled now while Obama is still in office. We're looking at four years of a president who claims to be for working people, but we suspect that's not true."

Larson said the coalition is reaching out to members of Congress and state officials to push the administration to grant widespread relief to the tens of thousands of people still waiting for approval, people like Ann Bowers.

Bowers, 56, said she never imagined that her pursuit of a master's degree would end with $53,000 in debt and a bunch of course credits that no one will accept. Halfway through a bachelor's degree in business marketing at Everest College in Orlando, she learned that the government cut off the school's access to federal student aid. She withdrew and tried unsuccessfully to transfer, believing that the school's reputation would make her degree worthless.

Two years ago, Bowers applied for federal loan forgiveness and had her loans placed in forbearance. Now all she can do is wait.

"Interest is still accruing. And I don't know for sure I'll be approved. By the time they make a decision, who knows what I'll owe," she said. "This is a nightmare being in this limbo. I never dreamed that when I enrolled in college that this is where I'd end up."
 

The lobby of Everest College in Santa Ana, Calif., on June 24, 2014. The for-profit Corinthian Colleges, parent company to Everest and another schools, was shut down in 2015.
DON BARTLETTI, LOS ANGELES TIMES/TNS

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