Attorney General Andy Beshear has called on federal authorities to immediately discharge the loans of Kentucky students who attended for-profit colleges that closed down while students were enrolled mid-program.
Beshear and a coalition of attorneys general are urging U.S. Education Department Secretary Betsy DeVos to fulfill her obligation under federal law to provide immediate and automatic loan relief to borrowers after a recent federal court ruling.
On Oct. 16, the department’s 2016 “borrower defense” regulations went into effect after a federal court held that the department’s repeated delay attempts were unlawful.
Under the department’s automatic closed-school discharge regulations, eligible students are those who attended a school when it closed on or after Nov. 1, 2013, and who did not subsequently re-enroll in an eligible program within three years from the date the school closed.
It is estimated that under federal law, tens of thousands of students nationwide who attended any of the 1,400 schools that closed in 2014 and 2015 – including Corinthian Colleges – are eligible for approximately $400 million in automatic debt relief.
Beshear said the regulations sensibly address the problem by automatically discharging eligible borrowers.
“In Kentucky students attending schools that closed have been left with no degree or benefit and substantial student loan debt, and they are entitled to have their loans discharged with no further action on their part,” Beshear said. “My office will continue to fight for all Kentuckians as consumers but more importantly as students who want to better themselves and their families.”
Among the 42 campuses in Kentucky that have closed since Nov. 1, 2013, are ITT Tech that closed its Louisville and Lexington campuses, and Daymar College that closed 10 campuses in Kentucky. Daymar’s campus in Bowling Green remains open.
Beshear’s office is committed to holding for-profit colleges accountable in Kentucky and is working to help defrauded students.
Earlier this year, The Office of Attorney General won its case against American National University, (formerly known as National College) in Fayette Circuit Court alleging that National College violated the Kentucky Consumer Protection Act by advertising false and misleading employment rates for its graduates.
Separate from school closures, students defrauded or cheated by their school may also be eligible for loan relief based on a federal program known as “defense to repayment.” This program gives victimized students the opportunity to have their federal student loans forgiven. When students submit a borrower-defense claim, they can request to have their loans placed in forbearance and to halt collection attempts, even on defaulted loans, Beshear said.
In 2017, Beshear secured federal debt relief for approximately 2,000 Kentuckians, many of them veterans, who were victimized by predatory practices by Corinthian Colleges Inc.
In 2016, Beshear announced nearly 3,500 former students of Daymar College’s Kentucky campuses and online programs would receive restitution checks totaling $1.2 million. The payments were pursuant to a settlement agreement the Office of the Attorney General entered into with Daymar in 2015 resolving a consumer protection lawsuit.