FTC Opens the Door to More Defense to Repayment Claims for Student Loan Forgiveness

The FTC made the announcement below that seems to open the door for students with federal student loans to explore the possibility of applying for a Borrower Defense Loan Discharge.

The Federal Trade Commission put 70 for-profit higher education institutions on notice that the agency is cracking down on any false promises they make about their graduates’ job and earnings prospects and other outcomes and will hit violators with significant financial penalties.

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The Commission is resurrecting its Penalty Offense Authority, found in Section 5 of the FTC Act, to ensure that bad actors pay a price when they break the law. By sending a Notice of Penalty Offenses to the institutions, which represent the largest for-profit colleges and vocational schools across the country, the companies operating these colleges will be on notice that they could incur significant sanctions for engaging in certain unlawful practices. The notice outlines a number of practices that the FTC has previously found to be unfair or deceptive, and notes that these practices could lead to civil penalties of up to $43,792 per violation.

“For too long, unscrupulous for-profit schools have preyed on students with impunity, facing no penalties when they defraud their students and drive them into debt,” said FTC Chair Lina M. Khan. “The FTC is resurrecting a dormant authority to deter wrongdoing and hold accountable bad actors who abuse students and taxpayers. Working closely with our state and federal partners, we’ll be monitoring this market carefully.”

This broad-based initiative to deter for-profit college fraud marks the agency’s first use of its Penalty Offense Authority to protect students and their families. The Notice of Penalty Offenses allows the agency to seek civil penalties against a company that engages in conduct that it knows has been found unlawful in a previous FTC administrative order, other than a consent order.

Many of the practices outlined in the Notice relate to claims made by institutions about the career outcomes of their graduates, including whether a particular career field is in demand, the percentage of graduates who get jobs in their chosen field, whether the institution can help a graduate get a job, the amount of money a graduate can expect to earn and other related practices. Complaints to the FTC around education-related issues surged roughly 70 percent between 2018 and 2020, and the Commission is committed to rooting out practices that harm students and their families.

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The Notice cites a number of administrative cases brought by the FTC against for-profit institutions in which the Commission found practices like those outlined in the Notice unlawful.

A full list of the institutions that received the Notice from the FTC for October 2021 is shown below. A school’s presence on this list does not reflect any assessment as to whether they have engaged in deceptive or unfair conduct. – Source

List of October 2021 Recipients of the FTC’s Notice of Penalty Offenses in the Higher Education Marketplace.

Academy of Art University Foundation
Alliant International University, Inc.
American Career College, Inc.
American Intercontinental University System, Inc.
d/b/a American Intercontinental University
American Public University System, Inc.
American University of Antigua Inc.
d/b/a American University of Antigua College of Medicine
American University of the Caribbean, Inc.
Asa College, Inc.
Aspen University, Inc.
Auguste Escoffier School of Culinary Arts
Aveda Institute Inc.
Technical Education Services
d/b/a Aviation Institute of Maintenance
Berkeley College Foundation, Inc.
d/b/a Berkeley College
Bryant & Stratton Business Institute, Inc.
d/b/a Bryant & Stratton College
Capella University, LLC
Carrington College, Inc.
Chamberlain University LLC
Charter College LLC
Colorado Technical University, Inc.
Columbia Southern University, Inc.
Concorde Career Colleges, Inc.
DeVry University, Inc.
ECPI University LLC
Empire Beauty School
Empowerment Schools-Healthcare, Limited
d/b/a The College of Health Care Professions
Fashion Institute Of Design & Merchandising
Florida Career Institute, Inc. d/b/a Florida Career College
Florida National University, Inc.
Fortis Colleges & Institutes
Full Sail, LLC d/b/a Full Sail University
Galen Health Institutes, Inc. d/b/a Galen College of Nursing
Grand Canyon University, Inc.
Grantham University, Inc.
Gurnick Academy of Medical Arts, LLC
Jersey College, Inc.
Lincoln Technical Institute, Inc
Lincoln College of Technology
Los Angeles Film School, LLC
Mech-Tech College LLC
Milan Institute
Miller-Motte College
Monroe College, Ltd.
New York Film Academy Ltd.
NUC University
Paul Mitchell Advanced Education LLC
d/b/a Paul Mitchell Schools
Post University, Inc.
Rasmussen College, LLC d/b/a Rasmussen University
Rocky Vista University, LLC
Ross Education, LLC d/b/a Ross Medical Education Center
Ross University School of Medicine
Ross University School of Veterinary Medicine
San Joaquin Valley College, Inc.
School of Visual Arts, LLC
South College
Southern Careers Institute
St. George’s University, School of Medicine, Inc.
Strayer University, LLC
The Sullivan University System, Inc. d/b/a Sullivan University
The University of Phoenix, Inc.
Tulsa Welding School
United Education Institute
Unitek College NCP, LLC
Universal Technical Institute, Inc.
University of St. Augustine for Heath Sciences, LLC
Vista College, LP
Vocational Training Institutes, Inc. d/b/a Pima Medical Institute
Walden University, LLC
Waldorf University
West Coast University, Inc. – Source

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