They want their student loans canceled

Dahn Shaulis posted a provocative comment yesterday higher education inquirer, He reported on the recent settlement of Sweet V. cardonaA class-action lawsuit accusing the US Department of Education of misconduct borrower protection Claim.

Briefly, the plaintiffs claimed that they took out federal student loans to attend schools that misrepresented their offers or violated various state laws. As Shoulis pointed out, nearly all of the schools affected by the lawsuit are for-profit colleges.

Under the terms of the settlement, DOE will cancel federal student-loans owed by 200,000 borrowers. Cost: about $6 billion, it is in addition $7.9 billion 690,000 students in debt relief under the terms of earlier borrower-protect agreements.

Fourteen billion dollars in loans canceled by 890,000 students: that’s a lot of malpractice. Which schools have been named by students who filed borrower protection claims?

DOE attached an addendum to Announcement Did Sweet Litigation listing over 150 schools. The list of accused offenders – nearly all for-profit institutions – includes a for-profit law school and a for-profit Caribbean medical school.

As we might expect, word has gotten out among student borrowers that President Biden’s DOE is more receptive to borrower defense claims than President Trump’s hardline contingent. As told by Mr. SoulisThere are now 750,000 pending borrower protection claims, and they are coming in at a rate of 16,000 a month.

II am in favor of the DOE’s leniency toward students who took out federal loans to attend for-profit institutions and did not get their money’s worth. I have no sympathy for for-profit colleges, many of which are owned by private equity funds, that don’t give a damn about the quality of education provided by their institutions.

Still, it may not be possible for the DOE to continue entering into large borrower-defense settlements until it cracks down on the main culprit – the for-profit college industry.

Basically, the DOE is behaving like a wealthy parent repeatedly paying damages for a son’s misbehavior without demanding that the child stop misbehaving.