Most fraud claims involve for-profits, study shows

WASHINGTON — Students who attended for-profit colleges filed more than 98 percent of the requests for student loan forgiveness alleging fraud by their schools, according to an analysis of Education Department data published Thursday.

The study by the Century Foundation represents the most thorough analysis to date of the nearly 100,000 loan forgiveness claims known as borrower defense received by the agency over the past two decades and paints an alarming picture of the state of for-profit higher education in America. The study was provided to the Associated Press ahead of publication.

The report comes as Education Secretary Betsy DeVos faces criticism for halting two Obamaera regulations that would have added protections for students. Review of tens of thousands of claims has stalled and the AP reported last month that the department now is considering abandoning the practice of full loan cancellation in favor of partial forgiveness. Student advocates point to the Trump administration’s ties to the forprofit industry and accuse DeVos of putting industry over students.

The study found “a disproportionate concentration of predatory behavior among forprofit colleges” that raises “serious concerns about the federal government’s current approach to providing relief to students who have been defrauded and misled.”

The Education Department said it needs to review the report before commenting.

Of the more than 98,800 complaints received by the department as of mid-August, 98.6 percent came from students at for-profit schools, while only 1.4 percent of them were filed by those who attended nonprofit institutions. For-profit schools account for only 10 percent of national enrollment and 18 percent of federal student debt, according to government data.

More than 75,000, or 76 percent, of claims came from students who attended the nowshuttered Corinthian schools, followed by more than 7,300 students from the ITT Technical Institute chain, as well as students from American Career Institute, the Education Management Corporation and others. The Century Foundation received the data through a Freedom of Information Act request.

“The for-profit college industry scams students across the country and taxpayers and that’s why the industry, including industry insiders who are now staffing the Department of Education, is now fighting so hard against rules that would clarify the borrower defense process,” said Toby Merrill, director of the Project on Predatory Student Lending at Harvard University, a legal services clinic that represents defrauded students.