Seth Pontiff has been waiting for three years to hear whether the $80,000 in loans he took out attending ITT Technical Institute — a for-profit college that closed in 2016 amid allegations of false advertising — will be discharged by the government.
In 2015, Pontiff, 36, filed what’s known as a “borrower defense to repayment” application, which allows borrowers to have their federal debt forgiven when they believe they’ve been deceived by their schools. Pontiff knew he’d been wronged by ITT.
During his time at the school, he says professors gave students answers during tests and, despite promises of job assistance, the only help he got was a reference to Best Buy /zigman2/quotes/205918291/composite BBY -1.06% — not the type of gig he was looking for with his bachelor’s degree in digital media.
Seth Pontiff hasn’t married his girlfriend of 10 years in part because he’s concerned about how his student loans would affect their joint finances.
Pontiff said he filled out the form “to the nines.”
But after several calls to get a sense of how close he might be to possible forgiveness, he said, “I just never could get a straight answer.”
In the meantime, the debt has dominated Pontiff’s life. He waited to replace his 14-year-old car until the transmission started acting up and he only falls back on credit cards for emergencies. The debt has influenced Pontiff in more personal ways, too. He hasn’t married his girlfriend of 10 years in part because he’s concerned about how his student loans would affect their joint finances.
“I really don’t want to put that burden on somebody else,” said Pontiff, who lives in Houma, La. “She’s very supportive, but it still bothers me.”
Pontiff and the thousands of other borrowers with similar stories illustrate the high stakes in a political debate currently playing out in Washington.
This summer, Betsy DeVos’s Department of Education proposed to loosen rules originally designed to clip the wings of for-profit colleges, arguing they were poorly developed and unfairly target the sector. Meanwhile, borrower advocates worry that if the Department’s proposed changes are finalized, thousands more borrowers are doomed to repeat Pontiff’s story.
Courtesy of Seth Pontiff
Victims of unscrupulous schools could have a harder time getting their loans forgiven
Last month, the Department of Education published a proposed rule curtailing the borrower defense program. If the proposal becomes law, the government would require future borrowers in Pontiff’s position to prove colleges intentionally defrauded them in order to receive relief, an extremely high burden of proof for a student to meet.
The proposal also weighs limiting relief only to borrowers who default on their student loans, which critics worry would force borrowers into a devastating financial situation to have their loans discharged.
If the proposal becomes law, future borrowers would be required to prove colleges intentionally defrauded them in order to receive relief.
The proposal, which is essentially a major revamp of the regulations as proposed by the Obama administration, would also make it much more difficult for students to receive relief if their school shuts down.
Just a few weeks later, the Department also announced plans to rescind the gainful employment rule, which requires career training programs to prove they’re preparing students for jobs and not just loading them up with unsustainable debt.
The twin rollbacks are part of a larger effort by Betsy DeVos’s Department of Education to dismantle Obama-era student-loan policies. The proposed moves have consumer advocates concerned that borrowers will be at increased risk of being defrauded on the front end, while having little recourse for recouping money on the back end.
“It just really feels like they’re declaring open season,” said Eileen Connor, the director of litigation at the Project on Predatory Student Lending at Harvard Law School.
Michael Dakduk, the executive vice president at Career Education Colleges and Universities, a for-profit college trade group, framed the rule changes differently in an emailed statement. He wrote that the proposed borrower defense rule offers protections “for everyone involved.”
“Our bottom line is that any student at any institution who is a victim of fraud must be protected,” he said. As it relates to gainful employment, he said his organization encourages the Department to equip students with information about programs in all higher education sectors, not just for-profit colleges.
The Department of Education didn’t respond to a request for comment.
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Students think they’re being prepped for careers with ‘top pay’
Jenssy Morales had the type of experience advocates like Connor worry about. A postcard in the mail advertising “top pay” lured Morales to Career Institute of Health and Technology to pursue an education in medical billing.
When Morales got there, she found the instructors were teaching “basic stuff, something you could have done by reading a book.” But she held out hope the school would connect her to a reputable internship.
Instead, after an internship experience set up by the school that she said “wasn’t so great,” Morales was unable to land a job in the medical-billing field. Unemployed for a period that coincided with the recession, she ignored her debt and had her tax refund garnished each time she filed her taxes after defaulting on her student loan.
Ultimately Morales was able to get jobs in retail — she’s currently working two — the field she worked in before attending the Career Institute. The school shut down suddenly in 2013, but it’s still unclear whether the federal government will wipe away her debt. She’s waiting for a response to a relief application she filed in 2017.
It’s taking years for defrauded students to get their debts wiped out
“From everything the Department has released publicly it appears that the borrower defense program is essentially frozen,” said Aaron Ament, the president of the National Student Legal Defense Fund, a student-loan borrower advocacy organization.
Ament is one of many people, including Democratic lawmakers , who have criticized the agency’s handling of claims, saying the Department has processed them too slowly. If agency officials get their way and the new law goes into effect, borrowers who take out loans after 2019 will have even more restricted access to relief, he said.
Scott Davis said he’s thought about going back to school to earn a more reputable degree, but he’d have to start all over because he can’t transfer his credits.
What’s more, Ament says, without the gainful-employment regulations, which place restrictions on schools where graduates don’t make enough money to cover their debts, borrowers are at risk of winding up in poor-performing programs like Morales did.
Regulators would also lose an important tool for ensuring colleges that do mislead students are held accountable and in some cases, prevented from doing more harm, he added.
‘I’m paying for an education that means nothing’
For Scott Davis, knowing now that ITT was able to recruit him even with shaky finances and mounting allegations of wrongdoing is one of the most frustrating parts of his experience with the school.
The promise of job placement assistance was one of the major reasons Davis chose to attend ITT to study drafting and design instead of pursuing his degree at a cheaper program. That help never materialized because the school closed shortly after he graduated.
Davis, 44, said he made many sacrifices to attend college, giving up time with his wife and four children to pursue his degree while working full-time. But now it seems like that effort and the $25,000 he still has in debt was for naught. Davis said he’s thought about going back to school to earn a more reputable degree, but he’d have to start all over because he can’t transfer his credits.
Meanwhile, he continues to wait to hear from the government about whether he’ll get relief. “I’m paying on an education that means nothing,” he said.