Campus Files: For Profit - Part 3: The Evidence is Clear
Release Date: May 28, 2025
Host: Ian Mott (Audacy)
Introduction to Borrower Defense
In the final installment of the Campus Files for-profit series, host Ian Mott delves into the critical issue of Borrower Defense to Repayment—a legal provision designed to offer loan forgiveness to students deceived by for-profit educational institutions.
Key Points:
- Borrower Defense Defined: Mott explains that borrower defense acts as a "refund," allowing students to have their loans forgiven if they took them out based on false representations by their schools.
- Historical Context: Introduced in the early 1990s, borrower defense saw minimal use until the expansion of for-profit schools highlighted its importance.
Notable Quote:
Ian Mott [02:52]: "Borrower defense to repayment or more simply borrower defense… if they knew about it, it could have changed everything."
The Collapse of Corinthian Colleges and Its Impact
The shutdown of Corinthian Colleges in 2015 marked a pivotal moment, thrusting borrower defense into the national spotlight.
Key Points:
- Corinthian Colleges: Once operating over 100 campuses, Corinthian's abrupt closure left tens of thousands of students with substantial debt and worthless degrees.
- Regulatory Scrutiny: Investigations spearheaded by then-California Attorney General Kamala Harris revealed widespread deceptive practices within the for-profit education sector.
Notable Quote:
Ian Mott [05:22]: "As the industry grew, it became a victim of its own success."
Teresa Sweet’s Journey and the Borrower Defense Process
Teresa Sweet emerges as a central figure in the fight for loan forgiveness, embodying the struggles faced by many students ensnared by for-profit institutions.
Key Points:
- Initial Struggles: Teresa accrued $140,000 in loans, which ballooned to $470,000 due to accruing interest during forbearance periods.
- Discovery of Borrower Defense: Inspired by a Facebook group, Teresa learned about the Borrower Defense provision and submitted her application in 2015.
Notable Quotes:
Teresa Sweet [06:34]: "There's a potential for a lawsuit about the halt in processing borrower defense applications. Would you be interested in talking to them about that?"
Teresa Sweet [08:17]: "I was pretty excited filling it out… bending toward justice."
The Sweet v. DeVos Lawsuit
As the political landscape shifted with Donald Trump's election, Teresa Sweet became the lead plaintiff in a landmark lawsuit against the federal government, represented as Sweet v. DeVos.
Key Points:
- Betsy DeVos' Role: Appointed as Secretary of Education, DeVos opposed debt cancellation and implemented stricter borrower defense rules, significantly reducing approval rates.
- Lawsuit Progression: Initially aimed at clearing the backlog of applications, the lawsuit evolved to challenge the validity of DeVos' rule changes, especially after discovery revealed intent to deny applications at unprecedented rates.
Notable Quotes:
Teresa Sweet [16:38]: "You made this commitment. This is something that affects tons of people."
Eileen Connor [09:35]: "Betsy DeVos is ideologically opposed to the idea of debt cancellation… appointed senior officials who had very close direct financial ties to the for-profit college industry."
Discovery and Evidence of Department of Education's Practices
Through the discovery phase, Eileen Connor and the Project on Predatory Student Lending (PPSL) uncovered alarming practices within the Department of Education under DeVos.
Key Points:
- Rapid Application Review: Attorneys were instructed to process applications in approximately 12 minutes each, targeting a 90% denial rate.
- Dismissal of Evidence: Even when departmental investigations found fraud, this evidence was disregarded, making it nearly impossible for deserving applicants to receive relief.
Notable Quotes:
Eileen Connor [19:55]: "We could ask behind the curtain for documents, we could take depositions of people… what we saw really changed the case."
Ian Mott [11:19]: "What Jason failed to mention is that third party applications require a very high standard of proof…"
Biden Administration and the New Settlement
With the election of President Biden, there was a significant shift in policy and approach towards borrower defense, culminating in a favorable settlement for borrowers.
Key Points:
- Policy Reversal: The Biden administration moved swiftly to reinstate and streamline borrower defense processes, facilitating the approval of applications from thousands of students.
- Settlement Approval: In November 2022, a new settlement was approved, offering substantial relief to borrowers and marking a victory for advocates like Teresa Sweet.
Notable Quotes:
Teresa Sweet [22:00]: "It was a party in the streets… we finally got something that we thought was fair and it was real."
Ian Mott [22:16]: "Whenever I'm having a crappy day… absolutely 100% worth it a million times over."
The Future of Borrower Defense: Perspectives from Industry
Despite the settlement, the battle over borrower defense is far from over. Industry representatives argue against the current framework, advocating for more restrictive measures.
Key Points:
- Jason Altmeyer’s Stand: As President and CEO of Career Education Colleges and Universities (CECU), Altmeyer asserts that borrower defense policies unfairly target for-profit schools and hinder legitimate students from receiving relief.
- Legislative Challenges: Altmeyer criticizes provisions like group relief and third-party applications, suggesting they can be misused to target schools based on political motives rather than genuine misconduct.
Notable Quotes:
Jason Altmeyer [26:17]: "Our concern… has evolved to be used in a way that it targets for profit schools… allow students who have not been harmed and have not been misled to also have their loans repaid."
Jason Altmeyer [27:56]: "We feel that the worst thing… would have been for those rules to continue and they're going to be struck down by the courts."
Industry Counterarguments and The Path Forward
Jason Altmeyer and industry representatives continue to challenge borrower defense regulations, seeking to reshape the policies to their advantage.
Key Points:
- Arguments Against Current Rules: Altmeyer contends that borrower defense is weaponized against for-profit institutions and that policies like third-party applications are susceptible to abuse.
- Legal Battles: For-profit schools have successfully challenged Biden-era rules in the courts, with the latest cases potentially reaching the Supreme Court to determine the future of borrower defense.
Notable Quotes:
Jason Altmeyer [29:37]: "We're very optimistic that we're going to get an opportunity to make that case."
Ian Mott [30:45]: "…for borrower defense to be basically destroyed…"
Closing Thoughts and Personal Reflections
The journey of individuals like Teresa Sweet underscores the profound personal and financial impacts of for-profit educational institutions and the importance of robust borrower defense mechanisms.
Key Points:
- Personal Impact: Teresa reflects on her graduation day, unaware of the challenges to come, and the eventual relief and justice achieved through her relentless fight.
- Ongoing Struggle: Despite significant victories, over 770,000 borrower defense applications remain pending, highlighting the continuing need for reform and support.
Notable Quotes:
Teresa Sweet [37:09]: "I just didn't know what was around the corner."
Teresa Sweet [38:17]: "I'm just glad I got to have that moment…"
Conclusion
The episode "For Profit - Part 3: The Evidence is Clear" offers a comprehensive exploration of the borrower defense to repayment process, the systemic issues within the for-profit education sector, and the ongoing legal and political battles that shape the future of student loan forgiveness. Through personal stories and expert insights, Campus Files illuminates the enduring struggle for educational integrity and financial justice.
Notable Contributors:
- Ian Mott: Host and Reporter
- Teresa Sweet: Lead Plaintiff in Sweet v. DeVos
- Eileen Connor: Founder of the Project on Predatory Student Lending (PPSL)
- Jason Altmeyer: President and CEO of Career Education Colleges and Universities (CECU)
- David Halperin: Education Analyst
- Margo Gray: Co-Producer
For more episodes and to follow Campus Files, visit Audacy’s Campus Files. If you have tips or story ideas, email campusfilespod@gmail.com.