Weekly Roundup: The federal aid scandal every student should know about

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In this week’s roundup, we breakdown the relationship behind the Illinois Institute of Art, the Art Institute of Colorado, Corinthian Colleges, INC (CC), and the Department of Education (DoED). If you haven’t heard about the situation, you’re in for a wild ride.

Consider this a cautionary tale to always check whether a school is accredited. For anyone considering diploma/certificate programs, or heading to technical colleges, this is always something to be aware of. If you have any questions about the credibility of your school, check out this article.

For-Profit Schools and Department of Education’s Potential  Federal Aid Scandal:

The Illinois Institute of Art and the Art Institute of Colorado may have closed their doors, but windows into their potentially illegal business dealings with the DoED continue to open.

In January 2018, both for-profit Dream Center owned schools officially lost their accreditation status.  Subsequently, the Dream Center was instructed to inform their students of this change. However, instead of complying with these instructions, they proceeded to falsely advertise the schools as accredited post-secondary institutions.  Where does the DoED factor into all of this?

Well, the July 2019 House Education and Labor Committee reports suggest that the DoED enabled the Dream Center to falsely advertise their accreditation status.   According to the reports, despite knowledge of the company’s fraudulent practices, the DoED worked with executives to “retroactively accredit” the institutions instead of demanding immediate corrective action.  The DoED’s alleged lack of initiative would have left students’ unprotected from enrolling and paying courses that would not be honored at most other institutions. Consequently, the Committee sought to further investigate the DoED and Dream Centers’ relationship.

On October 22, 2019, the Committee released a new trove of documents highlighting how the DoED improperly provided the unaccredited schools with $10.7million in federal grants and loans.  In addition to misallocating funds to the schools, the documents propose that the DoED “retroactively” partnered with Dream Center executives to convert the schools from for-profit to non-profit to restore their eligibility for federal funding.  Amidst these new findings, the Committee is threatening to subpoena Education Secretary Betsy Devos for the department’s role in Dream Center’s action. However, this would not be the first time Betty Devos found herself in the middle of a for-profit college funding scandal.   For more on this story, click here.

Betsy DeVos Held In Contempt Over For-Profit School Student Loan Forgiveness Case

U.S. Magistrate Judge Sallie Kim held Education Secretary Betsy DeVos in contempt of court on October 24, 2019.   This ruling comes after DeVos continued to collect student loan payments from students defrauded by the for-profit post-secondary education company Corinthian Colleges, INC (CC).  Subsequently, the ruling demands the Department of Education pay a $100,000 fine that will help cover remedies and legal expenses for students who were owed debt relief from the DoED after CC shut down amidst fraud allegations.

This ruling stems from a 2017 class-action suit against the Department of Education, in which Kim ordered DeVos to stop collecting loans from former CC students who applied for loan forgiveness.  Check out NPR’s coverage of this story for more information.