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AFR Statement: AFR applauds automatic debt discharges at ACI, calls for further action

Submitted by on January 13, 2017 – 1:49 pm
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FOR IMMEDIATE RELEASE: January 13, 2017

CONTACT: Alexis Goldstein, Americans for Financial Reform
alexis@ourfinancialsecurity.org

Americans for Financial Reform (AFR) applauds the news that the Department of Education will grant automatic discharges to all former students of American Career Institute (ACI) in Massachusetts, a school that entered into a consent judgement with the Massachusetts Attorney General’s office for misstating job placement rates and employing unauthorized instructors. AFR has long called on the Department to use its legal authority to discharge these debts now, without an individual application – as have former Corinthian studentsadvocateslawmakers, and law enforcement officials, with requests dating back to 2014. We welcome the Department’s exercise of their authority to grant automatic discharges to the harmed students of ACI in Massachusetts.

We are also encouraged that the Department announced today that, to date, 28,000 former Corinthian students who’ve applied for borrower defense discharges will receive them, and the Department has begun to grant discharges to former students of the now-bankrupt ITT Tech, a school that abused not only its students but also U.S. taxpayers through its misconduct. But there is much more work to be done. By the Department’s own estimates, a total of 125,000 former Corinthian students are covered by its two enforcement actions against the school (40,000 Heald students and 85,000 Wyotech and Everest students) and are thus eligible for discharges; these and other former Corinthian students who’ve yet to receive debt cancellation deserve relief.

The misconduct of for-profit colleges was not limited to Corinthian, ITT or ACI. For years, state attorneys general have unearthed evidence of for-profit colleges cheating students across the country. This fraud continued unabated for far too long, and students victimized by their schools illegal acts were left buried in debt. Today’s action is a sign that the tide is turning. The progress cannot end here. Interest continues to accumulate on the federal student loans held by hundreds of thousands of former Corinthian students and other victims of for-profit colleges where regulators and law enforcement have found endemic fraud. Before being confirmed, any nominee for Secretary of the Department of Education must clearly articulate plans to rapidly pursue additional automatic group discharges, to ensure that both students and taxpayers are protected from future exploitation of taxpayer-backed loans by predatory schools.

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