The Department of Education admits failing to include black students in its calculation of loan repayment rates in run-up to gainful employment. The mistake will fuel for-profit claims of unfair treatment by feds.
The U.S. Department of Education said Tuesday it would block for-profit colleges Globe University and the Minnesota School of Business from receiving additional federal student aid.
As of Dec. 31, students will no longer be able to use funds from Pell Grants or federal direct loans at those institutions, which are jointly owned. The Federal Student Aid Enforcement Unit found that the programs committed fraud involving Title IV funds and misrepresented their criminal justice programs as well as the ability to transfer their credits to other colleges.
Globe enrolls about 1,000 students at 10 locations across the Midwest, and Minnesota School of Business enrolls about 700 students in Minnesota.
“Globe and MSB preyed upon potential public servants -- targeting those with a sincere desire to help their communities,” Under Secretary of Education Ted Mitchell said in a written statement. “These institutions misrepresented their programs, potentially misleading students, and abused taxpayer funds, and so violated federal law, which is why we removed them from the federal student aid program. This is a sober reminder that not all institutions deliver on their advertised promises.”
The department blocked access to Title IV aid for new students enrolling at ITT Technical Institutes in August -- a serious blow that was followed the next month by an announcement that the for-profit would close its doors at campuses across the country.
Submitted by Paul Fain on November 28, 2016 - 3:00am
Academic programs enrolling roughly 16 percent of the University of Phoenix's student population do not pass the federal government's new gainful employment rule, according to a financial filing from the Apollo Education Group, the university's owner. Those programs failed the regulation's two student debt-to-earnings standards. The department recently released its first round of draft data for affected programs, with a scheduled January release for the final data sets.
Apollo previously had said it was winding down academic programs that were likely to not pass the standards. Those programs now represent one-fifth of the university's degree-pursuing student enrollment.
Student loan servicer Xerox Education Services will pay $2.4 million in a settlement agreement over allegations it mishandled students borrowers' applications for income-based repayment plans, Massachusetts Attorney General Maura Healey announced Tuesday.
Xerox -- known as ACS Education Services when the state launched its investigation -- serviced both federally backed student loans under the FFEL program and private student loans. The attorney general's office alleged that the company charged excessive late fees, did not protect active-duty service members and made calls to borrowers multiple times a week.
"To address this student debt crisis, we need students to be on repayment plans that will help them succeed, not fall further into debt," Healey said.
But the company undermined students' ability to enroll in those repayment plans, the attorney general said.
A portion of the settlement money will go toward restitution of the Massachusetts borrowers unable to enroll in lower payment plans. The company will also create a "borrower advocacy group" to provide assistance to borrowers looking to enroll in the plans in the future. The group will also provide information on federal loan discharge applications to students with loans associated with shuttered for-profits like Corinthian Colleges and ITT Technical Institute.
Healey has been aggressive in pursuing both loan servicing companies and for-profit colleges for alleged misconduct. Earlier this summer, American Career Institute -- a for-profit college Healey sued in 2013 -- admitted to deceptive practices and violating state law. And Healey has pushed for clear federal standards for former students of institutions like Corinthian to seek cancellation of their student loan debt.
President-elect Donald Trump has agreed to pay $25 million to settle multiple suits that charge Trump University with swindling its students. New York's attorney general, Eric T. Schneiderman, sued Trump in 2013. The settlement also covers other suits against Trump over Trump University. Trump has to date denied wrongdoing, and accused Schneiderman of playing politics with the suit. Trump University was not a typical for-profit university, as it operated outside standard licensure and accreditation requirements and, as a result, its students did not use federal aid. In fact, Trump University was never a university, and changed its name to Trump Entrepreneur Initiative when New York State officials said it could not call itself a university.
Schneiderman issued this statement: "In 2013, my office sued Donald Trump for swindling thousands of innocent Americans out of millions of dollars through a scheme known at Trump University. Donald Trump fought us every step of the way, filing baseless charges and fruitless appeals and refusing to settle for even modest amounts of compensation for the victims of his phony university. Today, that all changes. Today's $25 million settlement agreement is a stunning reversal by Donald Trump and a major victory for the over 6,000 victims of his fraudulent university. I am pleased that under the terms of this settlement, every victim will receive restitution and that Donald Trump will pay up to $1 million in penalties to the State of New York for violating state education laws. The victims of Trump University have waited years for today's result and I am pleased that their patience -- and persistence -- will be rewarded by this $25 million settlement."
President-elect Trump's transition press office did not respond immediately to a request for comment. However, Trump tweeted about the settlement on Saturday.
I settled the Trump University lawsuit for a small fraction of the potential award because as President I have to focus on our country.