Apr 3, 2024
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US Government Forgives $6 Billion Student Debt
by Karl Cohen
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The Academy of Art became notorious for allegedly foisting immense loans upon unprepared students. photo: courtesy Academy of ArtFORMER FILM AND ANIMATIONS
students who will benefit from this act of forgiveness include people who went to the for-profit Art Institute chain of schools and the Academy of Arts, both which I have covered (see article "Academy of Art’s Disastrous Loan Program". (The San Francisco Art Institute is not involved because it is is a non-profit.)
Although the latest grant relief action, which was announced on June 22, is only a tiny fraction of the $1.7 trillion in student loan owed by 43.4 million Americans, it is one of many actions that will be needed to keep our nation’s economy going in the right direction.
Under President Trump, people who applied for debt relief from student loans were mostly turned down, but now President Biden’s Department of Education is coming to the rescue, knowing full well that, if they don’t do the right thing, the student loan crisis could cause an economic meltdown of the nation’s economy. The situation could become as bad or as worse as the subprime mortgage crisis that caused a recession in the economy in 2007, a slump that lasted at least until 2009 and malingered much longer.
The current round of debt relief is going to students who attended for-profit schools that promised great educations and job placement but failed to do so. For-profit schools saw the potential in making enormous profits by recruiting student with false promises. Recruiters were hired and trained to tell every prospective student whatever was necessary to get them to enroll in the supposedly fabulous education that would lead to a well-paying job.
Some students did have the aptitude needed to succeed and find high-paying employment, but others were accepted who weren’t qualified and failed. The recruiters were coaxed in how to deceive potential students into believing they would be great achievers if they only got the needed education at the school they represented. Yes, they sometimes knowing lied to people who didn’t have the needed abilities. That was well documented in a series of Congressional hearings into the abuses of the for-profit school industry.
To make it easy to attend the school, potential students were told they could take out loans that would be easy to pay back, as there were lots of great jobs awaiting them on graduation. I once knew a teacher who had a desk down the hall from such a recruiter. She said she cringed every time a prospective student showed their portfolio to the recruiter. My friend knew she would hear the recruiter make the same false claims that the potential student had wonderful samples of their work. That would often be followed by a discussion of how to get a great low-cost loan with no payments due until… not that long after, as the fine print explicated.
Moreover, many people misunderstood the small print accompanying the easy-to-obtain, low-interest-rate loan saying it absolutely had to be repaid. Indeed, there were almost no exceptions to that clause. Statistics have shown that students who attended less-expensive community colleges and state universities and had borrowed fairly small amount to get their education, were most likely going to be able to repay their loans. The area where the greatest repayment problems occurred were with former students who attended the more expensive for-profit colleges. Sadly, the government let schools abuse the system for several decades.
Senator Elizabeth Warren says the $1.7 trillion student debt crisis was caused by “deliberate policy decisions.” Fortunately, the nation finally has a president that is working to reverse the problem by creating an aggressive loan forgiveness program. He has already forgiven over $25 billion and, on June 22, added another $8 billion. Unfortunately, it took years of hearings to even understand the problem, while any action to correct it under Trump stalled. Now at last progress is being made to make partial or complete student loan cancellation.
The government is making slow, but steady progress. Student loan borrowers have obtained relief by filing “borrow defense claims” with the Department of Education. They should claim they were misled or defrauded when applying for student forgiveness. June 22nd’s proposed settlement will provide student loan debt relief to students from more than 50 mostly for-profit colleges.
If you or somebody you know might benefit from this information, they may need to apply by October for financial forgiveness.
Karl F. Cohen—who added his middle initial to distinguish himself from the Russian Karl Cohen, who tried to assassinate the Czar in the mid-19th century—is an animator, educator and director of the local chapter of the International Animation Society and can be reached .
Posted on Jun 30, 2022 - 12:08 AM
by Karl Cohen
Please support our stories by liking articles—thanks!
The Academy of Art became notorious for allegedly foisting immense loans upon unprepared students. photo: courtesy Academy of Artstudents who will benefit from this act of forgiveness include people who went to the for-profit Art Institute chain of schools and the Academy of Arts, both which I have covered (see article "Academy of Art’s Disastrous Loan Program". (The San Francisco Art Institute is not involved because it is is a non-profit.)
Although the latest grant relief action, which was announced on June 22, is only a tiny fraction of the $1.7 trillion in student loan owed by 43.4 million Americans, it is one of many actions that will be needed to keep our nation’s economy going in the right direction.
Under President Trump, people who applied for debt relief from student loans were mostly turned down, but now President Biden’s Department of Education is coming to the rescue, knowing full well that, if they don’t do the right thing, the student loan crisis could cause an economic meltdown of the nation’s economy. The situation could become as bad or as worse as the subprime mortgage crisis that caused a recession in the economy in 2007, a slump that lasted at least until 2009 and malingered much longer.
The current round of debt relief is going to students who attended for-profit schools that promised great educations and job placement but failed to do so. For-profit schools saw the potential in making enormous profits by recruiting student with false promises. Recruiters were hired and trained to tell every prospective student whatever was necessary to get them to enroll in the supposedly fabulous education that would lead to a well-paying job.
Some students did have the aptitude needed to succeed and find high-paying employment, but others were accepted who weren’t qualified and failed. The recruiters were coaxed in how to deceive potential students into believing they would be great achievers if they only got the needed education at the school they represented. Yes, they sometimes knowing lied to people who didn’t have the needed abilities. That was well documented in a series of Congressional hearings into the abuses of the for-profit school industry.
To make it easy to attend the school, potential students were told they could take out loans that would be easy to pay back, as there were lots of great jobs awaiting them on graduation. I once knew a teacher who had a desk down the hall from such a recruiter. She said she cringed every time a prospective student showed their portfolio to the recruiter. My friend knew she would hear the recruiter make the same false claims that the potential student had wonderful samples of their work. That would often be followed by a discussion of how to get a great low-cost loan with no payments due until… not that long after, as the fine print explicated.
Moreover, many people misunderstood the small print accompanying the easy-to-obtain, low-interest-rate loan saying it absolutely had to be repaid. Indeed, there were almost no exceptions to that clause. Statistics have shown that students who attended less-expensive community colleges and state universities and had borrowed fairly small amount to get their education, were most likely going to be able to repay their loans. The area where the greatest repayment problems occurred were with former students who attended the more expensive for-profit colleges. Sadly, the government let schools abuse the system for several decades.
Senator Elizabeth Warren says the $1.7 trillion student debt crisis was caused by “deliberate policy decisions.” Fortunately, the nation finally has a president that is working to reverse the problem by creating an aggressive loan forgiveness program. He has already forgiven over $25 billion and, on June 22, added another $8 billion. Unfortunately, it took years of hearings to even understand the problem, while any action to correct it under Trump stalled. Now at last progress is being made to make partial or complete student loan cancellation.
The government is making slow, but steady progress. Student loan borrowers have obtained relief by filing “borrow defense claims” with the Department of Education. They should claim they were misled or defrauded when applying for student forgiveness. June 22nd’s proposed settlement will provide student loan debt relief to students from more than 50 mostly for-profit colleges.
If you or somebody you know might benefit from this information, they may need to apply by October for financial forgiveness.
Karl F. Cohen—who added his middle initial to distinguish himself from the Russian Karl Cohen, who tried to assassinate the Czar in the mid-19th century—is an animator, educator and director of the local chapter of the International Animation Society and can be reached .
Posted on Jun 30, 2022 - 12:08 AM
