7 ms·

For-profit college cancels $500M in student debt after fraud allegations

139 points by daegloe 8y ago

vinceguidry 8y ago
I'm guessing the kids who actually paid their student loan debts didn't get any of their money back.
- elliekelly 8y ago
  And this settlement only covers loans that students took out with the school directly. Any students with federal loans are still on the hook for every penny. Edit: Source for anyone interested[1]. Federal law provides individuals with federal student loans to discharge their loans under the "borrower defense" if the students were defrauded into taking out those loans. The intent was to allow debt relief for students of for-profit institutions who are saddled with with enormous loans when the education has little or no economic benefit. On paper, the CEC students are eligible for this program but DeVos has been reluctant to allow any borrowers to take advantage of the program. It's been an ongoing legal matter.[2] [1]https://www.capemaycountyherald.com/news/government/article_cedde136-0f87-11e9-9b44-43d0aa9ceefd.html https://www.capemaycountyherald.com/news/government/article_... [2]https://www.forbes.com/sites/zackfriedman/2018/10/17/student-loan-forgiveness-devos/#7f6777a86fd6 https://www.forbes.com/sites/zackfriedman/2018/10/17/student...
- mirimir 8y ago
  If it's been established that there was fraud, I'd think that they would have claims. If Career Education has any capital left, there's potential for a class action. And if I remember correctly, plaintiffs can demand treble damages.
  - vinceguidry 8y ago
    > If Career Education has any capital left, there's potential for a class action. I'm guessing there isn't any capital left.
    - leereeves 8y ago
      Is it possible to sue the executives and investors? Morally it seems appropriate. Execs who participated in or knew about and didn't report fraud sound like accomplices, and investors who received the proceeds of criminal activity shouldn't be able to keep those proceeds.
      - vinceguidry 8y ago
        Piercing the veil is deliberately kept difficult by the justice system. You need concrete proof, which is easily destroyed.
- olefoo 8y ago
  Clearly since a few people were able to succeed in engaging with a thouroughly corrupt system; everything is fine and there is NO NEED TO FIX ANYTHING. Thank you for clearing that up for us.
  - zamadatix 8y ago
    I read their comment the exact opposite way you did - that the corrupt system would get by without paying these people back.
stolson 8y ago
> More than 90 percent of its students are enrolled through online courses, according to the company. That's a huge number. I believe online education is going to be an important part of college education, but that's almost the entire student body. Good to see this debt being cancelled.
bko 8y ago
> The debt stems from institutional loans the company issued to students The article makes it sound as though these weren't government loans. Are students of that institution able to tap government loans? Bootcamps often post misleading statistics about placement numbers [0]. Will they be subject to the same fraud allegations? I would think misleading statistics are pretty much par for the course for nearly all form of sales. I generally apply by the principal of "never ask your barber if you need a haircut". These seem kind of fraud allegations seem to be arbitrarily enforced and politically motivated. [0] https://medium.com/@abinoda/coding-bootcamp-placement-rates-are-still-misleading-and-harmful-a761a0b9ecaf https://medium.com/@abinoda/coding-bootcamp-placement-rates-...
- rcarrigan87 8y ago
  The value of a college degree has changed whether you get the degree from an Ivy League School or a diploma mill. All colleges are basically false advertising at this point. The settlement will make some politicians feel good, but the reality is the entire system needs to be overhauled.
  - exogeny 8y ago
    I would dispute this, if only using personal experience. The value of my degree from CMU has paid itself back multiple times over in terms of doors opened. Your statement feels like too broad of a brush. In my view, there’s a huge fat tail of non-value add schools that are only surviving because of this perception, but the narrow bulb of the elite schools maintains that value if only due to networking and social proof.
    - ada1981 8y ago
      Did you study engineering at CMU and literally design a system that opens doors? That would be awesome.
      - SketchySeaBeast 8y ago
        "We here believe that the most important thing a college can do is lift its students up and open doors for them here at the Central Minnesota School of automatic door and elevator repair. Keeping you cool under pressure is the job of our sister school, the Minnesota Institution of Heating, Ventilation, and Air Conditioning."
exogeny 8y ago
For-profit college? Fraud? Surely you jest.
ada1981 8y ago
This would be a good requirement for any educational institution: “give all prospective students a single-page disclosure with information including job placement rates, anticipated costs and the average earnings of graduates.”
- protonfish 8y ago
  This seems like a terrible idea. Colleges should be about learning. I can understand guaranteeing what skills at what proficiency should be attained, but job placement and career advancement are the result of a different process. If you want a business that studies the needs of employers, gives crash courses in those skills to build what is determined to be a desired resume, and then aggressively markets you to prospective job opportunities, that sounds valuable, but it most definitely not an educational institution.
  - debacle 8y ago
    Colleges are only about learning for the upper quintiles. For the lower quintiles, they are and have always been about jobs.
  - _jal 8y ago
    Like it or not, the primary reason a lot of people go to school is related to desires about their future earning potential. I don't see how intentionally refusing to provide information on outcomes experienced by past students is going to benefit those people. Not everyone goes off to an expensive school at 18. Rest assured, those institutions are going to stay available. This is about for-profits, and calling those "educational institutions" is already an arguable proposition.
    - wonthegame 8y ago
      I would assume graduates that obtained high paying jobs would be more likely to complete these surveys. Of course they could include how many graduates were polled and how many responded.
  - tareqak 8y ago
madengr 8y ago
/rant The entire premise of these (snobbish) comments seems be: if you majored in anything that is employable, then it’s “vocational”, and you really didn’t learn anything. That’s insulting and a load of bullshit. I can only speak for EE, but it’s all theory and loaded with difficult math, physics, etc. So an English major is “educated”, but an EE education is trade school? I think the “educated” majors ought to take graduate level electromagnetics. They’d be raked over the coals. /rant
Vaslo 8y ago
Sometimes these issues occur in public Universities. A friend of mine took a Masters in Occupational Therapy, and their school continually advertised very high averages for OTs. The vast majority of the program staying the East Ohio/West PA area looking for jobs. The schools average was US and included much higher Cost of Living cities where salaries would be higher. When asked for local data, they had none available and claimed the data was local. Literally nobody got anywhere near that salary who stayed in the area, and none of the interviewing companies ever even offer something near that. An honest disclosure on how many people get jobs and how much they earn regionally should be required for any school, profit or non-profit.
- esotericn 8y ago
  Why regionally? In the UK, most move away from home to study, and then move away from their University to work. Anecdotally I don't know a single person who studied at University and works near their hometown. For many it's the main reason they study. To get out.
8bitsrule 8y ago
It should be mentioned that both of the schools owned by Career Education Corporation receive over 90% of their funding from the US Govt. https://en.wikipedia.org/wiki/Colorado_Technical_University https://en.wikipedia.org/wiki/Colorado_Technical_University http://en.wikipedia.org/wiki/American%20InterContinental%20University http://en.wikipedia.org/wiki/American%20InterContinental%20U... AIU was founded in 1970 'as the American Fashion College of Switzerland'. CEC has been under investigation since the mid-2000s, and decided to close most of its schools in 2015. Not that for-profit vocational-training schools with credibility problems are a new thing. They are 'accredited' by ten nationally recognized accrediting agencies overseen by the Dept. of Ed. It should be dismaying that schools which primarily 'serve' federally-funded DoD and GI Bill students are not held to objective claims about their efficacy.

139 points by daegloe 8y ago

vinceguidry 8y ago

I'm guessing the kids who actually paid their student loan debts didn't get any of their money back.

elliekelly 8y ago
And this settlement only covers loans that students took out with the school directly. Any students with federal loans are still on the hook for every penny. Edit: Source for anyone interested[1]. Federal law provides individuals with federal student loans to discharge their loans under the "borrower defense" if the students were defrauded into taking out those loans. The intent was to allow debt relief for students of for-profit institutions who are saddled with with enormous loans when the education has little or no economic benefit. On paper, the CEC students are eligible for this program but DeVos has been reluctant to allow any borrowers to take advantage of the program. It's been an ongoing legal matter.[2] [1]https://www.capemaycountyherald.com/news/government/article_cedde136-0f87-11e9-9b44-43d0aa9ceefd.html https://www.capemaycountyherald.com/news/government/article_... [2]https://www.forbes.com/sites/zackfriedman/2018/10/17/student-loan-forgiveness-devos/#7f6777a86fd6 https://www.forbes.com/sites/zackfriedman/2018/10/17/student...
mirimir 8y ago
If it's been established that there was fraud, I'd think that they would have claims. If Career Education has any capital left, there's potential for a class action. And if I remember correctly, plaintiffs can demand treble damages.
- vinceguidry 8y ago
  > If Career Education has any capital left, there's potential for a class action. I'm guessing there isn't any capital left.
  - leereeves 8y ago
    Is it possible to sue the executives and investors? Morally it seems appropriate. Execs who participated in or knew about and didn't report fraud sound like accomplices, and investors who received the proceeds of criminal activity shouldn't be able to keep those proceeds.
    - vinceguidry 8y ago
      Piercing the veil is deliberately kept difficult by the justice system. You need concrete proof, which is easily destroyed.
olefoo 8y ago
Clearly since a few people were able to succeed in engaging with a thouroughly corrupt system; everything is fine and there is NO NEED TO FIX ANYTHING. Thank you for clearing that up for us.
- zamadatix 8y ago
  I read their comment the exact opposite way you did - that the corrupt system would get by without paying these people back.

stolson 8y ago

> More than 90 percent of its students are enrolled through online courses, according to the company. That's a huge number. I believe online education is going to be an important part of college education, but that's almost the entire student body. Good to see this debt being cancelled.

bko 8y ago

> The debt stems from institutional loans the company issued to students The article makes it sound as though these weren't government loans. Are students of that institution able to tap government loans? Bootcamps often post misleading statistics about placement numbers [0]. Will they be subject to the same fraud allegations? I would think misleading statistics are pretty much par for the course for nearly all form of sales. I generally apply by the principal of "never ask your barber if you need a haircut". These seem kind of fraud allegations seem to be arbitrarily enforced and politically motivated. [0] https://medium.com/@abinoda/coding-bootcamp-placement-rates-are-still-misleading-and-harmful-a761a0b9ecaf https://medium.com/@abinoda/coding-bootcamp-placement-rates-...

rcarrigan87 8y ago
The value of a college degree has changed whether you get the degree from an Ivy League School or a diploma mill. All colleges are basically false advertising at this point. The settlement will make some politicians feel good, but the reality is the entire system needs to be overhauled.
- exogeny 8y ago
  I would dispute this, if only using personal experience. The value of my degree from CMU has paid itself back multiple times over in terms of doors opened. Your statement feels like too broad of a brush. In my view, there’s a huge fat tail of non-value add schools that are only surviving because of this perception, but the narrow bulb of the elite schools maintains that value if only due to networking and social proof.
  - ada1981 8y ago
    Did you study engineering at CMU and literally design a system that opens doors? That would be awesome.
    - SketchySeaBeast 8y ago
      "We here believe that the most important thing a college can do is lift its students up and open doors for them here at the Central Minnesota School of automatic door and elevator repair. Keeping you cool under pressure is the job of our sister school, the Minnesota Institution of Heating, Ventilation, and Air Conditioning."

exogeny 8y ago

For-profit college? Fraud? Surely you jest.

ada1981 8y ago

This would be a good requirement for any educational institution: “give all prospective students a single-page disclosure with information including job placement rates, anticipated costs and the average earnings of graduates.”

protonfish 8y ago
This seems like a terrible idea. Colleges should be about learning. I can understand guaranteeing what skills at what proficiency should be attained, but job placement and career advancement are the result of a different process. If you want a business that studies the needs of employers, gives crash courses in those skills to build what is determined to be a desired resume, and then aggressively markets you to prospective job opportunities, that sounds valuable, but it most definitely not an educational institution.
- debacle 8y ago
  Colleges are only about learning for the upper quintiles. For the lower quintiles, they are and have always been about jobs.
- _jal 8y ago
  Like it or not, the primary reason a lot of people go to school is related to desires about their future earning potential. I don't see how intentionally refusing to provide information on outcomes experienced by past students is going to benefit those people. Not everyone goes off to an expensive school at 18. Rest assured, those institutions are going to stay available. This is about for-profits, and calling those "educational institutions" is already an arguable proposition.
  - wonthegame 8y ago
    I would assume graduates that obtained high paying jobs would be more likely to complete these surveys. Of course they could include how many graduates were polled and how many responded.
- tareqak 8y ago

madengr 8y ago

/rant The entire premise of these (snobbish) comments seems be: if you majored in anything that is employable, then it’s “vocational”, and you really didn’t learn anything. That’s insulting and a load of bullshit. I can only speak for EE, but it’s all theory and loaded with difficult math, physics, etc. So an English major is “educated”, but an EE education is trade school? I think the “educated” majors ought to take graduate level electromagnetics. They’d be raked over the coals. /rant

Vaslo 8y ago

Sometimes these issues occur in public Universities. A friend of mine took a Masters in Occupational Therapy, and their school continually advertised very high averages for OTs. The vast majority of the program staying the East Ohio/West PA area looking for jobs. The schools average was US and included much higher Cost of Living cities where salaries would be higher. When asked for local data, they had none available and claimed the data was local. Literally nobody got anywhere near that salary who stayed in the area, and none of the interviewing companies ever even offer something near that. An honest disclosure on how many people get jobs and how much they earn regionally should be required for any school, profit or non-profit.

esotericn 8y ago
Why regionally? In the UK, most move away from home to study, and then move away from their University to work. Anecdotally I don't know a single person who studied at University and works near their hometown. For many it's the main reason they study. To get out.

8bitsrule 8y ago

It should be mentioned that both of the schools owned by Career Education Corporation receive over 90% of their funding from the US Govt. https://en.wikipedia.org/wiki/Colorado_Technical_University https://en.wikipedia.org/wiki/Colorado_Technical_University http://en.wikipedia.org/wiki/American%20InterContinental%20University http://en.wikipedia.org/wiki/American%20InterContinental%20U... AIU was founded in 1970 'as the American Fashion College of Switzerland'. CEC has been under investigation since the mid-2000s, and decided to close most of its schools in 2015. Not that for-profit vocational-training schools with credibility problems are a new thing. They are 'accredited' by ten nationally recognized accrediting agencies overseen by the Dept. of Ed. It should be dismaying that schools which primarily 'serve' federally-funded DoD and GI Bill students are not held to objective claims about their efficacy.