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Public Testimony: Alexis Goldstein calls on ED Department to Process Borrower Defense Applications

Submitted by on November 15, 2017 – 5:22 pm
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On November 14th, at the Department of Education’s negotiated rulemaking on Borrower Defense,  AFR’s senior policy analyst Alexis Goldstein gave public comment about the fraud experienced by students at for-profit colleges and the need for the Department to clear backlog of pending discharges for defrauded students by granting relief.

Here is her testimony, as prepared for delivery:


My name is Alexis Goldstein, and I am from Americans for Financial Reform, a coalition of over 200 civil rights, consumer, labor, business, faith-based, and community groups that works for a safer and fairer economy.

It is astonishing to me that we are here again. We are re-discussing and re-litigating issues we already covered at last year’s borrower defense rulemaking. This whole exercise is an extraordinary waste of time and effort.

But I want to take this opportunity to bring more voices of students into this room today. We’ve heard so much about schools during these proceedings, about these poor, maligned schools. I am frankly astonished at the level of martyrdom and victimhood I’m seeing from those representing for-profit institutions with millions of dollars.

I’ve heard representatives of for-profit institutions argue at this table to throw students into grievance processes with the school that scammed them.  Such a process would be entirely rigged because the school’s side is flush with money, and attorneys and legal expertise, and the other side is a student, who is almost never a lawyer themselves, who is just trying to make a better life for themselves. In our coalition, one of the issues we work on is forced arbitration, which is a similarly rigged process we’ve worked to limit, to ensure that consumers have a right to a fair day in court.

Last year, many students came to the  negotiated rulemaking to share their experience so the Department would understand the fraud they experienced. Last year, there was hope that the Department work to hold schools accountable and discharge the debt they incurred at schools that broke the law.  I don’t feel that same hope any more. I see a growing resignation — a belief that this Department now will defend schools that commit fraud, and narrow the ability to seek borrower defense discharges as much as they can, to as narrow of a standard as they can, so that no one qualifies for relief.

I want to read some quotes from some of these students, from a Senate report that was just released today from the offices of Senators Dick Durbin and Elizabeth Warren.

Ami Schneider went to the Illinois Institute of Art, an EDMC school. She writes “The school defrauded me plain and simple.” And: “In class, we did not learn the skills we were supposed to be learning…“

The report goes on: “Despite being on the Dean’s list and graduating with honors, Ami found it nearly impossible to find a job upon graduation: “Employers don’t see it as a reputable institution…If it is on my resume, it looks bad or they don’t care. The degree has never opened any gainful employment.”

Ami is now saddled with debt: “[Illinois Institute of Art] convinced my mom that I would get grants… Grants and scholarships barely did anything. $76,000 was the tuition they quoted. Ended up with loans over $100,000… they just took us out of classes and had us sign things…“[M]y loans ran out. They had [my mom] come in and write a check for $5,000.”

Again, the report informs us that “Since graduating, Ami recalled being harassed by Navient about her student loans: ‘they would robocall me all hours of the day, sometimes 20 times a day. They called my grandparents in Florida. They had nothing to do with my loans.’”

Ami’s financial struggles have caused signicant distress in her relationships, fighting with her mother about finances. She writes “I thought maybe I am better off dead.”

Another student in the report is Heather Beckstead, who attended the Art Institute of Phoenix (EDMC) . She has $67,000 in federal loans and $21,000 in private loans.

She writes: “I was defrauded. I was lied to. I was promised something I didn’t get. My government should care about that. I want to feel that my government has my interests in mind but it does not feel that way now.”

The Art Institute did not provide students the resources necessary to succeed: “There were not enough tools to be successful. I would show up to class and there would not be enough computers. I went a whole semester fighting for a seat at a computer…All the tools were old, outdated, or broken and they did not make any attempts to fix them. Some teachers had work experience in the field but their knowledge was very limited, not as qualified as we were led to believe. A lot of the time students taught the class or we watched tutorial videos on YouTube.”

Finally, there is Nino, from California, who attended ITT Technical Institute.

He writes: “The whole [education] was basically a scam, it ruined my life and I wasted two years and a half of my life. They didn’t even say that I will be in debt after graduation. At the beginning they told me not to worry about having a loan because I was eligible for the highest financial aid.” (His total loan debt is $29,000).

Nino attended ITT Tech because he “wanted to pursue a Bachelor’s or Master’s [degree]” in computer network systems. Upon graduating, the institution “guaranteed” he would have a job, “won’t be in debt,” and that “the credits transfer to most universities.” However, his experience did not match these basic expectations.

The Department of Education has not processed any new borrower defense claims since this Administration took over. The Department already has the authority it needs to discharge these loans, and I implore you to do so immediately.

If I seem frustrated, it is because I am frustrated. These former students have been waiting for years, their lives on hold, their credit ruined, unable to access other forms of credit because their debt-to-income ratios are often too high. They have nothing to show for the years they invested at these schools, many of which are not just Corinthian or ITT, but are schools that are still open.  The students who were defrauded believes the promise society makes them: that education is the key to a better life. These students believed that promise, but instead they left these schools worse off than when they started. You have the power to change that. I implore you to use it.

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