How to Avoid & Actually Address For-Profit College Scams

Many students are heading to school.  Others are investigating further education.  Education is good, except when it isn’t.  Here is important information to avoid and actually address for profit college scams.

Earlier this month, Judge Gonzalo Curiel ruled students could proceed in their lawsuit against Trump University.   A ruling based on facts, not ethnic heritage.  While Trump University isn’t a ‘university’ the fraud alleged is the same as that among many for profit colleges.  Today at least 168 for profit institutions exist in America.  Recently 30 such institutions closed leaving many students with nothing but massive debt.

This past week the Department of Education shut down a loophole some profit colleges were pursuing.  The Center for Excellence in Higher Education, a Utah-based chain of for-profit career colleges sought to come under a not for profit umbrella trust to avoid regulation.  The U.S. prevents for-profit colleges from generating 90% or more of their revenue from student loans.  They also require certain disclosures to potential students.

This is critical.  Too many students are not told the complete cost of schooling (for profits cost an average of four times as much as community colleges), are pushed to borrow in order to attend (80% borrow vs. less than half of students at public institutions), and are unable to attain promised employment thus resulting in a high default rate (for profit loans make up 11% of borrowers but 44% of all defaults).

A few weeks ago BuzzFeed reported on the challenge facing tens of thousands of people who can cancel their student loans because of fraud, but don’t know it.  Many of these students attended Corinthian College chains – Heald, Everest or WyoTech.  Each of these schools recruited heavily on promises of graduates receiving higher paying jobs.  This was not true.  Many students of these schools and others found themselves attacked by scam artist.  These scams promised to eliminate the debt for a fee.  Now students were victimized twice as the scam artist did nothing.

One such student is Rina Orlando.  Like many Americans, Rina wanted to better herself through education.  Everest College promised her a good paying job if she completed their bachelors program.  They pushed her to take out more and more loans totaling $80,000.  When she could borrow no more, she was left with no degree and a $15 an hour job at an asphalt company.  She was without any hope of ever paying the money back.

Two separate debt settlement firms with official looking letterhead contacted her promising to erase the debt.  She paid them $1,500 and received nothing in return.  “These Education Department groups – they’ve taken a lot of money from me and they haven’t done anything.”

Then Rina found help.  Her hope was restored.  She learned the debt could be eliminated.  Sobbing she said, “I’ve been waiting so long for someone to tell me that.”

How can you avoid the scams that trapped Rina?  How can you help someone actually address for profit college scams?  Here’s guidance.

How to avoid the for-profit college scam.

Gospel Justice Initiative believes strongly in preventative legal education.  An ounce of prevention is worth a pound of cure.  Avoiding debt and scams is always best.  If you are serving the community, consider hosting a community education forum on this topic.  If you are an individual contemplating attending a for-profit school or know someone in that circumstance, here is some quick guidance.

  1. Count the Cost

Education is a good investment.  But like all investments you need to do your homework.  How much will this cost you?  The College Affordability and Transparency Center is an excellent place to start.  The College Navigator is also helpful.  Make a budget and be certain to include all cost including room and board, books, and any hidden fees.

  1. Make certain the College is Accredited.
  2. Know the graduation and job placement rate.

Are those jobs in the new field for which you are going to school?  Check with some potential employers to see if they would hire someone with a degree or certificate from the school.

How to actually address college scams if you were misled.

Unfortunately there will always be some people who in pursuit of making money cross the line into fraud and exploitation.  These individuals cast aspersions on those who are trying to do the right thing in serving customers.  Not every for profit institution is bad.  But too many are.  If you feel you were misled, your school is one of 30 that closed, or you are helping someone in these circumstances, here is guidance.

  1. Speak out.

The government is taking public comments on protecting those scammed by for-profit institutions.  Share your comments before August 26.  

  1. Get educated.

This is all about education.  The best way to combat misinformation is with good information.  Share this fact sheet and the most recent government report.

The report is especially helpful for lawyers assisting individuals in helping to determine nature of loan, eligibility for write off, and tax consequences.   Presently William D. Ford Federal Direct loans are covered, however, FFEL and Perkins loans are not.  But they may be eligible if consolidated.  The IRS has determined those scammed by Corinthian Colleges will not incur any tax liability.  The tax impact of other for profit school fraud is presently determined on a case by case basis.

  1. Provide help.

This chart demonstrates states where claims are prevalent.  While this is a universal problem, if you are in one of these states then consider doing more to raise awareness and provide practical help.


So far 12,254 claims have been processed.  The government is aware of at least 335,000 eligible individuals scammed by Corinthian Colleges alone.  Many people need to be made aware of the possibility of debt relief and assisted in the process.

People need a safe place to turn for help.  This is an excellent opportunity for a gospel justice center or one of many reasons to create such a center.  Even absent a legal ministry, another legal aid, church or trusted local service agency can provide assistance.

Here is the form that needs to be completed.  There is no cost for filing the form and people should be steered away from scammers charging to eliminate debt and not doing anything.

Share this information with others.  Consider what you can do to help your neighbor.  What do you think?  What one thing will you do to make a difference?