1,300 colleges, mostly commercial, have $ 1 billion in outstanding debt



  • The National Student Advocacy Network found that 1,300 colleges owe the Department of Education $ 1.2 billion.
  • Most of them are for-profit colleges that have closed in past years due to allegations of fraud.
  • Meanwhile, in October, the department is preparing to resume collection of student loans.
  • See more stories on the Insider business page

As soon as the disbursement of student loans stops in October, the Department of Education will resume efforts to collect student debt from 43 million borrowers nationwide. But, according to a new report, debt collection from higher education institutions – to taxpayers – doesn’t seem to be viewed in a similar way.

The nonprofit National Student Legal Advocacy Network has published report Last week, as of February 2021, nearly 1,300 higher education institutions owed about $ 1.2 billion to the Ministry of Education. Most of the debt belongs to commercial schools, with the largest outstanding debt at more than $ 244 billion from the defunct Waterott College.

“While the Department aggressively tries to recover from borrowers, institutions, as well as their owners and managers, are dodging more than a billion dollars owed to taxpayers,” the report said.

The report notes that even though the department has a “wide range” of methods that require institutions to pay off their debt, it has failed to use these tools, allowing the debt to remain unpaid.

Education Department spokeswoman Kelly Leon told Insider in a statement that the Department “is committed to improving our policies and practices to better hold institutions accountable for their actions and provide borrowers with fair and orderly access to the benefits to which they are entitled. “

Here are other key findings from the report received by the Freedom of Information Act request team:

  • About 200 of the 1,300 debt-backed organizations were still receiving Title IV funding from the government;
  • The department has recertified institutions with student assistance arrears;
  • And the department’s inability to raise money cost at least $ 218 million because the collection restrictions expired.

The message added that the department did not collect relatively small amounts of debt. For example, the for-profit University of the Rockies owed $ 883,613 in 2019, which the department did not collect based on the data collected in the report.

President Joe Biden’s Department of Education has started fight commercial school fraud by writing off the student debt of some defrauded borrowers. More recently, Education Minister Miguel Cardona canceled student debt for 18,000 borrowers were deceived by the now defunct technical institutes ITT, the total amount of debt cancellation was about $ 500 million.

But even though institutions still owe billions of dollars to taxpayers, the Department of Education preparation return borrowers for repayment in October – something legislators have defenders strongly against.

“When we organize together, fight together, and persevere together, we win together,” said Massachusetts Senator Elizabeth Warren. wrote on Twitter on Sunday. “We must all raise our voices and urge the Biden administration to extend the pause in student loan payments and #CancelStudentDebt… “


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