Before College: If You Must Borrow For Your Education, Don’t Do So To Attend For-Profit Schools!

We recently warned you to be careful regarding for-profit postsecondary schools. Now another warning — if you need loans to pay your postsecondary expenses, we believe you should not go to for-profit schools. Here’s why . . .

Some for-profit schools are good, ethical businesses. But most students found to have been swindled by postsecondary schools attended for-profit schools. In fact, banks and states generally won’t make student loans at for-profit schools at least in part because their fraudulent practices undermine debt repayment. Therefore, your only option for borrowing to attend for-profit schools is usually the Federal Direct Loan Program (FDLP).

The U.S. Education Department (ED) decides which schools get into the FDLP. It then oversees those schools to protect students and taxpayers. But ED sometimes does these jobs poorly, especially in the for-profit sector, which many believe is also poorly regulated by states.

Therefore, Congress passed a law many years ago requiring ED to cancel FDLP debts owed by students who were suckered by postsecondary schools, and holding schools owners liable for the government’s losses from such cancellations. The law also empowers ED to make regulations regarding such cancellations.

Last September, under Education Secretary Betsy DeVos, ED published regulation changes that have been criticized for undermining your ability to have your FDLP debts cancelled if your school conned you. These changes affect FDLP Loans with first disbursements on July 1, 2020 or later.

Specifically, FDLP cancellation will become harder and maybe even impossible to get because the regulatory changes will require students to:

  • Prove schools knowingly misrepresented the students’ educational programs, costs, or outcomes — something that’ll never happen without sworn statements from school employees;
  • Prove misleading school acts financially harmed them in ways going beyond their FDLP debts;
  • Provide individualized proof that schools mislead them — ruling out proof state attorneys generals and others obtain about schools misleading groups of students — even though few students can afford their own individual attorneys and investigators to get such proof; and
  • Apply for loan cancellation within three years of leaving their schools — instead of whenever they realize their schools ripped them off.

Both houses of Congress passed a joint resolution that even 20% of Senate Republicans supported to stop these changes. But President Trump, who in 2016 reportedly spent millions to settle lawsuits brought for 6,000 students who’d attended his for-profit school, vetoed the resolution last Friday. And there aren’t enough votes for Congress to override Mr. Trump’s veto.

So, student loan borrowers, College Affordability Solutions must advise you to skip for-profit schools no matter how good they sound. Instead, attend community colleges, state technical schools, or traditional public or private nonprofit universities with good, long histories.

Comparing different postsecondary schools? Want some help analyzing and matching up their costs? Contact College Affordability Solutions at (512) 417-7660 or by emailing collegesfford@gmail.com to arrange a free consultation!