As Evidence of Systemic Fraud Builds, the Dept of Ed Continues to Collect on Fraudulent Debt

After members of the Debt Collective stood up for their rights, the Department of Education finally acknowledged its responsibility to investigate fraud among schools to which gives money to and to discharge the loans of students who were victims of fraud. It even acknowledged that where there is evidence of systemic fraud the group of students who were all exposed to fraudulent behavior should automatically have their debts canceled.

But acknowledgement of a responsibility is not the same thing as doing something about it.

In addition to public protest and lobbying their elected representatives, members of the Debt Collective have quietly been sending the Department of Education evidence of the fraud they were exposed to. Even this evidence has built up, the Department has claimed that it does not have enough--that it needs more time to investigate. Students have offered to testify in front of the new Enforcement Division, to connect its investigators to former employee whistleblowers, and the like, but we have been met with silence.

We have been told to wait. Easy to say when you're not the one with your earned-income tax credit being taken from you, delaying marriage, or losing your home.

To show how ridiculous it is that the Department of Education still has not cancelled the student debts of any but a few students from Corinthian (and has refused to grant group-based discharges--still insisting on individual applications), we include here some statistics on the mountain of evidence of systemic fraud they have in their hands.

Because most of the applications for debt relief that the Department receives come from the online application we created, we have a unique understanding of what the Department of Education knows or should know. The data below is as of November 1, 2016.

First, on Art Institute. Last year, the DOJ settled a lawsuit against EDMC, the private equity company that wholly owns AI, for an outrageously low amount without any admissions of wrongdoing or public release of the evidence of student-facing fraud they accumulated. But even if they did not have that evidence, they would have over 1,600 applications for debt relief from defrauded students testifying in detail to the fraud they experienced. The below table summarizes the information on wrongdoing contained in those applications:

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Next, on ITT Tech. The Dept of Ed just shut down ITT, but was careful to insist that it did not do so because it had evidence of ITT defrauding students. Of course ITT has faced lawsuits from attorney generals across the country, the CFPB, and the SEC as well as whistleblower lawsuits that the Dept of Ed and the DOJ ignored. But maybe that evidence wasn't enough. In addition, they have received nearly 2,000 applications for debt relief from defrauded students. The below table summarizes (at a very high level of generalization) the information on wrongdoing contained in those applications:

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If thousands of applications for relief where students detail the ways they were misled according to the categories the Department of Education itself uses is not enough evidence, then the new Enforcement Division needs to clarify what is. The students whom the Dept of Ed continue to impoverish have waited long enough.