Senators demand investigation of for-profits' default rate strategies
- Eight Democratic U.S. Senators, in a letter sent Thursday to Education Secretary Arne Duncan, called for an investigation of major for-profit colleges' methods of evading rules designed to reduce student loan defaults.
- Federal law denies a school student financial aid eligibility if it has too many students defaulting on loans, and for-profits have reportedly misled and harassed students to place their loans in "forbearance" or "deferment" status--regardless of the student's situation or whether it's in their best financial interest--so the schools wouldn't have to report those loans as being in default.
- The for-profit education sector receives around $32 billion a year in federal student aid money, and many of its biggest schools have been caught using deceptive or coercive recruiting practices, offering poor quality programs and lying to government officials about job placement successes, but efforts to hold them accountable and reform the sector have been curbed by GOP leaders.
From the article:
Eight U.S. Senators today sent a letter to U.S. Secretary of Education Arne Duncan calling on him to investigate tactics used by some major for-profit colleges to circumvent rules aimed at reducing student loan defaults. A report issued in July by Senator Tom Harkin's Health, Education, Labor, and Pensions (HELP) committee documented that several big for-profit colleges were misleading and harassing students to convince them to place their loans in "forbearance" or "deferment" status so that the schools would not have to report their student loans as in default. Federal law takes away a school's eligibility for student financial aid if too many of the school's students are defaulting on their loans. ...
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