Attorney General Ellison continues defense of student-loan borrowers
Seeks loan cancellation and payment refunds for defrauded ITT students; calls on U.S. Sec. of Education to address broader student-debt crisis
April 2, 2021
APRIL 1, 2021 (SAINT PAUL) — Minnesota Attorney General Keith Ellison took two actions in the last two days to defend borrowers of student loans, especially those who took out loans for for-profit schools that defrauded them or went defunct. Today, he sought relief from student debt held by Minnesotans who were defrauded by now-defunct ITT Technical Institute, while yesterday, he joined other attorneys general in urging an overhaul of the Department of Education’s harmful polices towards student borrowers that were implemented under former Secretary Betsy DeVos and the Trump administration.
“The economy is stacked against regular people. That makes it hard for way too many folks to afford their lives,” Attorney General Ellison said. “People seek higher education to build a better future for themselves and their families, but the sky-high cost means too many of them have to take out levels of student debt that make it impossible to build that better future — and Minnesotans are hit harder by high student debt than people in most states. I’m proud to join national coalitions fighting for relief because no Minnesotan and no American should be hobbled by outrageous debt when they’re just trying to afford their lives.”
This week’s actions are the latest in a long series of steps that the Minnesota Attorney General’s office has taken to protect the borrowers of student loans from fraud, deceptive practices, and abuse.
Seeks discharge of loans for students defrauded by ITT
Today, Attorney General Ellison submitted a formal application to discharge student loans that Minnesotans took out when they attended ITT during a period in which the school was engaged in systemic fraud that found as part of a multistate investigation. The for-profit schools operated two campuses in Minnesota that enrolled 200 Minnesota residents and an online campus that enrolled 1,000 more Minnesota residents when it suddenly closed in 2016. The for-profit school encouraged prospective students to enroll and take out several thousands in debt every year based on false and misleading information about the value of an ITT degree and empty promises of high-paying jobs after graduation.
The Attorney General’s application—known as a “borrower defense” application—was joined by a bipartisan coalition of 24 state attorneys general and addresses students who attended ITT Tech between at least 2007 and 2011 when these deceptive tactics were used to convince students to attend the school and borrow federal student aid. The application argues that these widespread and pervasive misrepresentation violated Minnesota’s consumer protection laws. Federal law permits the Department of Education to forgive federal student loans when borrowers were deceived in obtaining loans.
Based on the findings uncovered by the multistate investigation and supported with expert testimony, Attorney General Ellison demands full relief to ITT students, including refunds of the money students already paid on those loans.
This is one of several actions that the Minnesota Attorney General’s Office has taken to address fraud and mismanagement by ITT. In October of last year, Attorney General Ellison reached a settlement with a trust that held $1.6 million in student loans that were issued by ITT and which the Attorney General alleged were unfair and illegal. The trust agreed to forgive the debt rather than face litigation. And in a letter sent in November 2019, Attorney General Ellison requested that the Department of Education enhance debt relief for students that were impacted by ITT’s sudden closure and bankruptcy filing. The Department recently responded to that letter on March 9, 2021, that it is considering the request to broaden loan relief related to the closure. The Attorney General’s Office also filed a claim in ITT’s bankruptcy and is working to ensure that defrauded students receive maximum compensation in that process.
Urges more reforms to protect borrowers
In addition, yesterday Attorney General Ellison joined a coalition of 23 attorneys general in a letter to the U.S. Secretary of Education Dr. Miguel Cardona that urges additional reforms to ease the process of paying student loans and protect student-loan borrowers from paying back debt to for-profit and defunct colleges.
In their letter, the attorneys general urged Secretary Cardona to consider several policy actions that would help student loan borrowers, including:
• Continuing the policy of suspending student-loan payments and waiving interest for as long as necessary to support struggling borrowers;
• Continuing the policy of suspending of involuntary collections activities, as well as authorizing suspended payments to count towards both Public Service Loan Forgiveness and income-driven repayment (IDR) plan forgiveness;
• Enacting reforms so that student-loan borrowers are able to access and remain in IDR plans to which they are entitled, enabling borrowers to have more affordable monthly payments, to avoid the serious consequences of default, and to secure loan forgiveness when appropriate; and
• Enforcing the gainful employment requirement of the Higher Education Act, which would shield borrowers from for-profit programs that fail to prepare students for careers.
In the letter, Attorney General Ellison and the coalition applaud the steps the Department took on March 30 to expand pandemic protections to privately-owned loans. They also welcome President Biden’s commitment to consider using executive authority to cancel student debt, writing: “...we strongly urge that any debt cancellation should apply to all federal loans – including Federal Family Education Loans and Perkins loans that are not owned by the Department... For many with student debt, the current system is highly complex and difficult to manage. This is a needless source of great anxiety and is plainly unfair. We can and must do better.”
Joining Attorney General Ellison in the letter, which was led by Pennsylvania Attorney General Josh Shapiro and Colorado Attorney General Phil Weiser, are the attorneys general of California, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Vermont, Virginia, Washington and Wisconsin