What Can I Do With My Art Institutes and Argosy University Private Student Loans? – Robyn

Question:

Dear Steve,

I have 2 private loans with Navient that is a result of extremely high tuition fees from a “for profit” college. I attended the Art Institute, part of the EDMC and Argosy for profit schools, which have recently closed down 15 of their campuses nationwide. Of course, my campus is not one of the schools being closed, but I have noticed that there are several lawsuits that have been filed against the school for predatory recruiting and falsifying career employment upon completion of the program.

Here’s my case :

1. Fraudulent Claims

I could make a strong case that I was misled by the campus as the only reason I decided to attend this campus Art Institute San Francisco, was because of their exceptional career placement services. (I was told at the time of the deciding to attend that they had the highest career placement rate and were the top campus for placing Graphic Designers, and that many of the surrounding business in the industry came to their campus to recruit graduates).

I’m not sure if this would help my case or not, but I know that the school was struggling to get re-accreditation while I attended and was receiving financial aid. There was a huge review underway over the degree programs and classes. The Graphic Design program imploded as the school realized that the degree they were offering was not in touch with industry standards, as the industry was heading towards web design and not graphic design. They were looking at combining the two degrees, but did nothing to compensate students that they knew were graduating with an already outdated degree; Is there something there that I can use?

2. Employment Rates and Salaries Falsified

Career placement had high turnover once I graduated and were restructuring at the time. I asked for help several times and never received a response for career services. They were always asking if I had a job in the industry so they could inflate the false placement numbers. They considered being employed at anything career placement. I have not been able to find steady employment since I graduated in Dec 2011 and have only been able to take contract work for a short amount of time in the industry.

3. Private Loan to pay for inflated tuition expenses

I’m struggling to make my private loan payments and while I was able to get a temporary interest reduction payment, it’s still causing financial hardship. I know that loan forgiveness or discharge is nearly impossible to receive with private loans. My loan originated with Sallie Mae and was then sold to Navient when the two branches split.

What can be done about these “for profit” predatory schools and private loans? Would it be worthwhile to pursue the Defense Against Repayment Provision ? Do have any type of case that I can pursue against this inflated private loan?

Robyn

Answer:

Dear Robyn,

If these were federal loans you would absolutely have an option to pursue a Borrower Defense to Repayment claim. If you claim was approved your student loan debt would be forgiven and you would receive a refund of all the student loan payments you made. But these are not federal loans.

Private student loan lenders make no fraud forgiveness plans available. You could clearly be the victim of fraud and it does nothing to absolve you of your private student loan payments. In fact fraud with private student loans isn’t even the basis for a bankruptcy discharge.

You have two options.

1. You could sue the schools yourself and attempt to obtain a settlement or court opinion that the schools violated the law and you were the victim of fraud. You’d then have to use that ruling in an attempt to have the private lender forgiven the debt. That would be horrifically expensive to pursue unless you were part of a class action suit. You could look for a student loan attorney here.

2. You could bring your issues to the attention of state and federal government agencies, like the CFPB, in hopes they would pursue a case against the schools. But even though the United States did receive a nearly $100 million settlement against Art Institute, the company never admitted the fraud allegations filed against them.

As part of that settlement, some students did receive loan forgiveness. But to be eligible for loan forgiveness students “must have been enrolled in an EDMC program with less than 24 transfer credits; withdrew within 45 days of the first day of their first term; and their final day of attendance must have been between January 1, 2006 – December 31, 2014.” – Source

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Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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