While student debt looks to be one of the peak issues of the current political field, school debt also ought to be part of the conversation.
More than 1,200 colleges, most of them privately owned, for-profit schools, owe money to the federal Department of Education. Over $1 billion in fines and other fees is owed by the institutions, according to a review of DoE documents by a third party. Some of this money, which the Department of Education has allegedly made no attempt to collect, consists of fines for misconduct or discharged student loans specifically connected to schools defrauding students. The Department of Education has been in the news often in the past several years for continuing to pursue those same defrauded students for loan repayments, even after court orders to desist.
“The Department of Education continues to spend time and money opposing struggling student borrowers while doing nothing to collect more than $1 billion owed to the government by colleges and for-profit companies,” said National Student Legal Defense Network vice president and chief counsel Dan Zibel. Zibel formerly oversaw higher education litigation matters for the Obama administration.
Unbelievably, 200 of the schools that owe money continued to receive federal money in the 2019-2020 school year, in violation of the Department of Education’s own policies in the matter. Withholding of federal funds is the chief pressure the DoE can use to pressure an institution to pay its debts.
Press secretary Kelly Leon made a statement to CNN on behalf of the Department of Education, calling the agency “committed to improving our policies and practices to better hold institutions accountable for their actions and to provide borrowers with fair and streamlined access to the benefits to which they are entitled.”
Recovering this school debt would nearly cover the $1.5 billion in student loans which the Department of Education had to cancel after it was revealed that ITT Tech and other similar for-profit schools were defrauding their students.