ST. PAUL — Minnesota Attorney General Lori Swanson is asking the U.S. Department of Education to forgive the federal loans of 1,000 students who attended a for-profit college chain when it was found to have committed fraud.
In a letter to Education Secretary Betsy DeVos, Swanson wrote the department should forgive, under the “closed school discharge program,” the loans of students enrolled at Globe University and the Minnesota School of Business in September 2016, when a Hennepin County District Court found the school defrauded students.
A judge found the schools misled students about its criminal justice program, saying it would lead to careers in law enforcement when it didn’t meet the state requirements. The fraud ruling led the state to revoke the schools’ ability to operate in Minnesota and the federal government to halts its access to financial aid.
Despite those rulings, the two schools tried to remain open for months, working to place some students in other programs. The delay in closure made it more difficult for students to have their loans forgiven, Swanson said.
“Federal law, however, clearly instructs that the Department relieve students from their unjustified debts and allows the Department to recoup the cost of discharging these loans from the schools that violated the law,” Swanson wrote.
She is asking DeVos to extend the “look back period” in the “closed school discharge program” to the date when the schools were found to have committed fraud. That should allow the 1,000 students who were enrolled at the time, but couldn’t finish their degrees, to have their debts wiped out.
Swanson noted that most schools will not accept credits from the for-profit colleges, leaving students who were unable to graduate with nothing to show for their work or debt. Tuition at Globe and the Minnesota School of Business was more than $20,000, Swanson wrote, forcing students to borrow money to cover the costs.
Student loan debt is tough to escape, even in bankruptcy, and unpaid loans can keep students from borrowing again and result in bad credit and even wage garnishments.
Globe representatives argued at trial and after the verdict that the problems in the criminal justice program should not have resulted in the schools closures. They said the program was ended after the issue was brought to light and students were generally happy with the other degree programs.