Time line

2011 September
More and more college students are filing bankruptcy even though student loans are not dischargeable under US bankruptcy laws, according to article on Fox business news. Default rates are at their highest in decades - approaching 14 percent, halfway to the record high default rate of 23 percent in 1989. And For profit (predatory trade schools) trade schools have the highest default rates again.

2011 September
Thousands of students who took out tens of thousands of dollars in student loans to attended San Francisco’s California Culinary Academy, one of 18 cooking schools in the Le Cordon Bleu for-profit college chain, may be getting some of their money back.
Under a pending $40 million settlement in state court, Career Education Corp., Le Cordon Bleu’s parent company, has agreed to offer rebates of up to $20,000 to approximately 8,500 students who attended the academy between 2003 and 2008.
In a class-action lawsuit, former students of the cooking school accused it of misleading them about the value of a culinary education and their job prospects after graduation. The students alleged the for-profit school defrauded them with promises of high-paying jobs and encouraged them to take on crushing debt from student loans for expensive programs but provided them with no more chance of finding a high-paying culinary job than someone who didn’t go to culinary school at all.
Although the school’s website says 48 percent to 100 percent of graduates find work in their field of study or a “related field,” critics say that the school purposefully uses methodology that includes jobs that don’t pay much more than minimum wage and that don’t require a formal culinary education.

This is the first time students have sued a For profit school successfully, for their recruitment and job placement fraud.


2011 August 12. Once again the US Department of Education fails in its attempt to regulate For Profit schools, who are obtaining federal funds thru state ran agencies. The result: Millions of wasted Taxpayer dollars.

The Department of Education has distributed massive amounts of federal financial aid to online for-profit schools that were unlicensed in the states in which students were being enrolled. Rather than admitting to this extraordinary mismanagement, the Education Department put into effect a "state authorization" regulation that basically reiterates what's already in the law: that online schools must obtain a license from states in which students are being enrolled to benefit from federal financial aid. Issuing a rule that simply repeats the existing Higher Education Act requirement is counterproductive -- as it suggests that the statute, by itself, does not already include this mandate.


2011 July. The state of Texas closes down ATI Enterprises, a For profit trade school after a local TV station investigations proves that ATI has been "cooking the books" for years about job placement of its graduates. 2 Thumbs up for the State of Texas. It is just a shame that it took a TV Station to uncover what the Federal government, should have found.

2011 June. For the First time in our nations history, the US Department of Education uses Local Swat team to raid private home, because adult living there owed student loans.

http://www.deathandtaxesmag.com/100591/education-department-sends-swat-team-for-student-loan-payment/#1

So much for the right to privacy, the right to be king in your own castle, and the right against government invasion. What is next? Public flogging for j-walking?

2010 Aug. - Westwood College, owned by Alta Colleges Inc. At least 750 former Westwood students and employees have come forward with complaints about the school engaging in deceptive recruiting practices that have left some students with an unmanageable amount of debt, according to a class-action lawsuit filed in U.S. District Court in Denver, Colorado, in August.

2010 June. - A Chicago law firm filed a lawsuit on behalf of students at Illinois School of Health Careers claiming the school engaged in deceptive trade practices. Students say the college failed to inform them that the school's nursing program was not approved by the Illinois Department of Public Health.

2010 March 23rd - SCOTUS Confirms Chapter 13 Can Include Student Loans.
On March 23, 2010, the U.S. Supreme Court issued a 9 – 0 opinion in United Student Aid Funds, v. Espinosa (08-1134) in which the Court affirmed the 9th Circuit’s holding that a chapter 13 debtor can obtain a discharge of a student loan by including it in a chapter 13 plan, if the creditor fails to object after notice and opportunity to do so, and the BK court enters an order confirming the chapter 13 plan. In bankruptcy, a student loan is not discharged unless the bankruptcy court makes a determination that excepting the student loan would be an undue hardship on the debtor. Under Bankruptcy Rules, the court is required to make such a determination in an adversary proceeding — a lawsuit within the bankruptcy case. In Espinosa, the debtor did not bring an adversary proceeding. Rather, the debtor put in his plan that only the principal amount of the loan would be paid through the plan, but that accrued interest would be discharged. The student loan lender did receive a copy of the plan, and even filed a Proof of Claim. But, the lender did not object to confirmation.
The court did, subsequently, enter an order confirming the plan as proposed. After confirmation, the chapter 13 trustee sent a notice to the lender, saying that the Proof of Claim amount differed from the amount stated in the chapter 13 plan, and that if the lender disputes the amount in the plan, they should notify the trustee within 30 days. After the debtor completed his plan payment, the student loan lender tried to collect the remaining amount due. The debtor filed a motion seeking enforcement of his bankruptcy discharge.
The lender filed a motion seeking to declare the order confirming the chapter 13 plan void — which was the issue before the Supreme Court. That is, the student loan lender argued that the BK Court order confirming the chapter 13 plan void because they (the lender) was denied due process regarding the required statutory finding of undue hardship, which did not happen here.
The Supreme Court, in looking only at Bankruptcy Rule 60(b)(4), which permits a court to relieve a party for a final order or judgment, found that the lender was not denied due process, since the lender did receive the plan, filed a claim, and received the notice from the chapter 13 trustee. The Court agreed that the confirmation of the plan without an undue hardship determination was legal error, legal error does not void the order. The Court noted that Rule 60(b)(4) strikes a balance between the need for finality of judgments, and the right of parties to have a full and fair opportunity to raise issues.

2009 July 22nd, Two men have pleaded guilty to illegally accessing the National Student Loan Database to get personal information about borrowers without their consent.
Both men worked at loan consolidation companies in Pinellas County, where they abused their access privileges to the NSLDS, a comprehensive computerized database maintained by the U.S. Department of Education that contains borrowers' personal and financial information.
The marketing director for University Financial Lending Services, one of the 2 men misused database accounts in the spring of 2007.
Working as a senior financial specialist for Student Funding Services in Largo, the other abused his access to the database between 2005 and 2007.

2009, July new america.net blog does an excellent article on getting to know guarentee agencies. www.newamerica.net/blog/higher-ed-watch/2009/getting-know-guaranty-agencies-federal-subsidies-and-payments-12976#comment-3136

Getting to Know Guaranty Agencies: Federal Subsidies and Payments
Ben Miller - July 2, 2009 An excellent article that finallys starts to shead light on the backroom industry that is destorying so many futures of students who are in default.
By contrast, when a guaranty agency rehabilitates a defaulted student loan, it receives 18.5 percent of the loan's value at the time of default, plus any interest that has accrued since then (usually around 1.5 percent).[i] In addition, it keeps another 18.5 percent of the loan in the form of collection costs that have been added to the borrower's balance owed. Rehabilitating a loan thus yields the guaranty agency as much as 38.5 percent of the loan's balance.
Similarly, payments for default aversion pale in comparison to those for collection efforts. A guaranty agency receives 16 percent of any amount it collects.
In addition, there is no strict cap on collection costs, meaning it could charge borrowers as much as 25 percent for trying to recover missed payments. With payments this high, a guaranty agency has to collect only a small amount of a loan's balance in order to earn more through this activity than what it gets for default prevention.
The significant discrepancy between payments for rehabilitation/collection and default aversion means that the most profitable action for guaranty agencies -- letting a loan default -- is the worst possible outcome for borrowers, taxpayers, and even lenders. The guaranty agency may receive a hefty payday from this action, but the federal government is on the hook for at least 97 percent of the loan's value, while student loan companies suffer the other 3 percent loss. Meanwhile, defaulted borrowers are left with a tarnished credit record, and face wage garnishment, and other types of aggressive collection activities.

2009, July. Student Loan collections agencies creates breach of trust.
It has been discovered recently that a student loan debt collection company, Vangent, is moonlighting as staff for the Department of Education's Ombudsman office. We confirmed this yesterday. As such this creates a breach of trust between the ombudsman office and that of the students. This is being looked into.

March 2009. Media is finally picking up the story. Many articles on both the web and local television covering the predatory student loan fiasco. Media reporting about how current students are having a difficult time finding loans to complete their degrees, how recent grads cannot find work to pay off their loans and thus end up in default right of the start, and how defaulting destroys lives.

Even more so, the media is also looking at the history of Higher Education and how we moved from a pell grant system which allowed people to be able to go to school and pay for it with grants and a part time job, to one that puts a student up to their eyeballs in debt for 20 years after they leave school.

Consumer protections and the lack thereof are also discussed.

2009, Feb. Article published on alternet calls student the new indentured servants.
Are Students the New Indentured Servants?
By Jeffrey J. Williams, Dissent Magazine. Posted February 5, 2009.
College student-loan debt has revived the spirit of indenture for a sizable proportion of contemporary Americans.

2009, Feb. Article published on web about Credit scores being used to deny employment opportunities. Claims that with the current economic conditions, having bad credit is not proper grounds for denying employment. But that has what has happened to many students who found themselves in default after long periods of unemployment.

2009 Jan. Articles are appearing on the internet calling for loan forgiveness to stimulate the economy, due to the economic collapse of the U.S.
More and more articles are discussing the impact of the debt of students who find themselves in default due to economic conditions, NOT because of refusal to pay the debt. FINALLY, the media is starting to get the real story: That many people in default are that way because they lost jobs, were unemployed for long periods, etc.
Combined with the home Mortgage crisis and the new American economy crisis, more and more people are finding themselves in economic and financial distress. Many are defaulting on loans simply because they do not have enough money to pay their basics, (home, and transportation costs) let alone any luxuries.

2009 Jan Alan Coolinge, founder of studentloanjustice publishes a book entitled "The Student Loan Scam; The most oppressive debt in U.S. History - and how we can fight back." One of the first ever such books to be published on this subject.

2009 Dec Article in Higher Ed watch on Bankruptcy.
http://www.newamerica.net/blog/higher-ed-watch/2008/bankrupt-policy-8753 reports that "In fact, a 1977 study by the General Accounting Office - which Congress appears to have ignored -- found that only a fraction of 1 percent of all matured student loans had been discharged in bankruptcy. "This compares favorably with the consumer finance industry," the study stated.

And, the bare facts are that in 1976, Congress made student loans generally non-dischargeable except five years after default or if the borrower could prove "undue hardship." Since then, there have been three significant legislative changes. First, in 1990, the five year period was extended to seven years. In 1998, Congress eliminated the seven-year floor primarily as a budget savings gimmick to pay for student loan changes it made when it reauthorized the Higher Education Act that year. Finally, in 2005, lawmakers included private loans in the non-discharge ability category as part of comprehensive bankruptcy amendments (the change primarily affected for-profit lenders because private loans made by nonprofit providers were already exempt). If there were reasons to consider restricting bankruptcy for federal loans, there was absolutely no such basis for extending the policy to high-cost private loans.

2008 Oct. The Chronical of Higher Education website posts article.
Suit Alleges Fraud in 'Resolving' Troubled Student Loans By PAUL BASKEN

A former Sallie Mae employee, in a "false claims" lawsuit against the loan company recently unsealed in federal court in Indiana, alleges that the student-loan giant used the practice of granting forbearances to systematically balloon student-loan debts.
With a forbearance, struggling borrowers get a temporary break from making payments on their loans. But the interest on the loans continues to accumulate, often leaving borrowers in a worse financial bind over time.
Mr. Zahara said he was fired from his job in Las Vegas after he reported his concerns about the practice to federal investigators. Sallie Mae moved much of the operations to its new Indiana facility in October 2006, and Jeff Whorley, the executive vice president in charge of the Student Assistance Corporation, left Sallie Mae in January 2007.
Debtors in such straits include William M. McLaughlin of Plattsburgh, N.Y., who borrowed $37,625 to attend Embry-Riddle Aeronautical University, in Florida, in the early 1990s. He has paid back more than $50,000 and still owes more than $33,000.
As far as I knew, I wasn’t in default,” said Mr. McLaughlin, now 49, who worked several years in aviation maintenance at Pratt & Whitney in both Canada and Connecticut. “I was making payments and everything, and the next thing I know, these people are calling me, and there’s a whole other set of loans that I wasn’t even aware of that I’m defaulting on now.”
Most of his loans were held by Sallie Mae, with USA Funds and ERS among the agencies placed in charge of contacting him for payment, Mr. McLaughlin said.
“Lenders don’t care if you default,” said Alan M. Collinge, founder of StudentLoanJustice.org, a grass-roots organization for borrowers. “On balance, it can actually be far more profitable for them when you do.”
And Sallie Mae’s size and importance in the system of federally subsidized student lending gives it protection against the possibility that a federal prosecutor would punish it for further violations, Mr. Stern said.

And that fact is as true today as ever before. Sallie Mae for all practical purposes, is untouchable, and unaccountable, according to may students who have to deal with them.

2008 May. www.bankruptcylawnetwork.com/2008/05/01/some-student-loan-justice-in-st-louis/
Article about a woman who filed for and obtained bankruptcy discharge (rare occurrence) for undue hardship. In 2004, she filed with 71K due in student loans. In a way, the facts of this case are themselves unique. Not unique in the struggles and hardships the debtor has suffered, since her story is all too common. Rather, unique in that Senior Judge David McDonald looked beyond the superficial labels to the consumer’s dire situation — and bleak future. Because she proved to the court that due to her spotty employment record for over 10 years, left her with little or no money to pay the loans, AND, due to this courts own view of what is and what is not "undue hardship".
Perhaps the most important factor in this case was the court’s rejection of the Income Contingent Repayment Plan (ICRP) as a substitute for the law. It has been argued by student loan lenders that a debtor’s ability to fund a reduced payment under the ICRP is sufficient grounds to deny a hardship discharge. This argument has been rejected by the Eighth Circuit Bankruptcy Appellate Panel (most recently in an opinion written by the same judge who heard this case), although such a position has been defended aggressively by the Eastern District’s chief judge less than two years ago in a concurring opinion.
For example, the only time the ICRP allows for no payment is when a consumer’s income falls below federal poverty line. And that poverty line definition is now being challenged as out of date, and out of sync with reality.

The assumption has been that a consumer must prove it is a virtual human rights violation to make even a minimal payment in order to win. And given the added costs of litigating — and the high probability of an appeal plus addition of litigation costs to the debt owed, if discharge is denied — most consumers and their lawyers have come to believe the right to a hardship discharge a chimera. So perhaps the law is beginning to evolve towards a more balanced understanding of what is an “undue” hardship. Such an evolution will be welcome indeed.

2008 Jan. Chronicle of Higher Education reports a suit alleging fraud in resolving troubled student loans. Article claims that if Sallie Mae were ever put out of business, it would put a huge dent in the ability of the industry to service student loans. Now what was it my grandpa told me about “putting all your eggs in one basket”?!!

2008 Jan CNN webpage on the tv show, “Money line” reports on Student loan fugitives who have left the country, and cannot return because they cannot afford to make payments on their student loans, and that if they do return, they are afraid every penny they make will be taken from them, thus preventing them from saving for retirement (not becoming a burden to society when the are unable to work due to old age), or from ever owning a home. As one person says, “why should I try to make a payment of any amount, and be forced to live as a 3rd class citizen, when not one penny goes to paying off the principal?”. And that is the main thorn for so many who are in default. The interest payments alone, blown out of proportion due to default status, makes it all but impossible for these people to pay off their loans.

Another fellow says "But I'm most angry at the fact that for anyone who has debt that's not student loan debt, there's relief. You can get into $150,000 worth of credit card debt and you can declare bankruptcy and you can go on with your life. But with student loans, you're being punished for trying to be a better person."

2008 Under the new administrative garnishment law, students who are refusing to give USDE or Private Collections Agencies (PCA) access to bank accounts, refusing/unable to pay the monthly amount demanded due to lack of funds, or students who challenge the validity and/or amount of the alleged debt are being classified as “unwilling to pay”.

Then the USDE or PCA is using that classification to empower them to issue administrative garnishments, which destroy the student’s ability to earn a living, amongst other things.

2008 April 3rd. Reports of many banks pulling out of the student loan industry due to the United States Economy. Students half way thru their education in danger of defaulting and becoming victims of the student loan industry. Many banks admit to getting involved with student loans only because the government guaranteed them.

2008 Jan Sallie Mae says no more loans.
Several leading companies that provide higher education announced that they had been told by Sallie Mae and other lenders that they would severely restrict or cut back entirely on student loans to their students. In separate announcements:

Corinthian Colleges said that Sallie Mae, which provides 90 percent of the private loans taken out by its students, would no longer make loans to students with poor credit scores (who represent about 75 percent of Corinthian students who receive private loans, the company acknowledged). Corinthian also said that College Loan Corp. had told the company that it would stop making all private and federal loans to the for-profit higher education sector, and that another lender, Student Loan Express, would no longer make private loans, but will continue to make federal loans to for-profit colleges.
Career Education Corp. made a similar announcement, saying that Sallie Mae had decided to end a two-year agreement to provide the college company’s students with “recourse loans,” also known as “opportunity loans” — loans provided by some lenders to students with lower credit scores who might not otherwise qualify for loans. Career Education said it would search for alternatives to such loans but might end them altogether.
ITT Educational Services issued an upbeat statement (headline: “ITT Educational Services, Inc. Announces Availability of Additional Student Loan Options") saying that three lenders — Bank of America, Chase Education Finance and Citibank’s Student Loan Corporation — had agreed to provide federal and private loans to its students through 2008-9. ITT’s statement neglected to mention, however, that those lenders would be replacing Sallie Mae, which is pulling the plug on some of its loans to ITT, too.
Sallie Mae is expected to announce its fourth quarter and year-end results in a news conference today, and is likely to say at that time exactly how far back it is cutting its student loan business. The company had said in a filing this month that it would be “more selective” in making federal and private loans, but until the for-profit companies began making their announcements Tuesday, it was not clear exactly what that meant.

2008 Feb 23. www.ripoffreport.com/reports/0/311/RipOff0311484.htm Student loan finance person reports that Everest college, Kalamazoo Michigan office, is altering Government student loan paperwork to show students as being totally independent of their parents, so that they can qualify for Government student loans, when in fact they are not qualified for such. This is the same practiced used by the schools previous owner, National Education Center, when it owned the school in the 1980’s.

2007 Feds Raid Another Broward Campus -3 Florida College Campuses Raided in U.S. Department of Education Investigation.
http://www.topix.com/city/fort-lauderdale-fl/2007/10/federal-agents-raid-another-career-college
Federal investigators raided another Broward County for-profit technical school on Wednesday, shutting students out while agents seized documents. Officials with the U.S. Department of Education executed a search warrant at the Fort Lauderdale offices of the National School of Technology and loaded boxes into a Budget rental truck. Agents conducted similar raids at Florida Career College campuses Tuesday in Lauderdale Lakes and Pembroke Pines. The National School of Technology has three other campuses, Miami, Hialeah and Kendall, and offers programs like medical insurance billing, medical assisting, pharmacy tech and patient care. It's accredited by the Accrediting Bureau of Health Education Schools, which is recognized by the federal government as a legitimate accrediting agency. The for-profit school is owned by the California-based Corinthian Colleges Inc., which operates dozens of schools nationwide, including Florida Metropolitan University, which has a campus in Pompano Beach. In their annual report filed with the U.S. Securities and Exchange Commission, Corinthian Colleges acknowledged that it is being investigated in Arizona and Illinois for its lending practices. The California Attorney General sued the company in August alleging some schools in that state inflated student success rates and told fake success stories in marketing materials. The company settled the case for about $6.5 million. The National School of Technology and Florida Career College were named by the federal government as having some of the worst student loan default rates in Florida in the late 1980s. Students at Florida Career College campuses in Lauderdale Lakes and Pembroke Pines returned to classes Wednesday, and school officials said they didn't anticipate any more 2008 Feb 23. http://www.ripoffreport.com/reports/0/311/RipOff0311484.htm Student loan finance person reports that Everest college, Kalamazoo Michigan office, is altering Government student loan paperwork to show students as being totally independent of their parents, so that they can qualify for Government student loans, when in fact they are not qualified for such.

2007 Corinthian Colleges Class Action Lawsuit
Corinthian Colleges, Inc.,
This action is brought on behalf of public investors who purchased or otherwise acquired securities of Corinthian Colleges, Inc. between August 27, 2003 and June 23, 2004. The Complaint charges Corinthian and certain of its executive officers with violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and S.E.C. Rule 10b-5. Plaintiff alleges the Company failed to disclose and misrepresented material adverse facts which defendants knew or recklessly disregarded, including that: (1) the Company manipulated financial aid documents to boost loan amounts available to students, thereby fraudulently receiving additional federal funds; (2) the Company used the fraudulently obtained funds to boost its revenues and stock price; (3) the Company lacked adequate internal controls; and (4) as result of the illegal practices, Corinthian's earnings and net income were materially inflated and in violation of Generally Accepted Accounting Principles.
https://www.glancylaw.com/amazing_case.php?caseid=84

2007 July
LOS ANGELES — California Attorney General Edmund G. Brown Jr. today announced that Corinthian Schools, Inc. and Titan Schools, Inc. will pay $6.5 million, including $5.8 million in consumer restitution, to settle a lawsuit alleging that the for-profit vocational operator engaged in false advertising and unlawful business practices by presenting inaccurate salary and employment information to students.
http://caag.state.ca.us/newsalerts/release.php?id=1444

2007 NY AG Cuomo Says the Student loan program is broken and should be abolished.

2006 NOV 30 Canadian TV Whistle blower story about a large Canadian private college, CDI.
One of their former students, Aaron LaForest, had sued the college, claiming he was misled and didn't get the computer education he signed up for. LaForest has won his lawsuit. CDI has been ordered to pay him $5,000 in expenses and damages. The judge said he agrees with LaForest -- that CDI did not deliver as promised.
He's now suing CDI for $10,000, alleging "false advertising and misrepresentation." Laforest claims, in his lawsuit, "There has been no teaching received throughout this program." CDI College is owned by a U.S. corporation called "Corinthian Colleges" - and it is also being sued by some students in the U.S. It's being investigated by the State of Florida, as well, over its advertising and marketing practices. There has been no conclusion announced in that probe yet and Corinthian Colleges maintains that they have complied with all regulatory standards. "There should be an investigation done on the school," said Laforest. "What the school said was not what it turned out to be."
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20060601/whistleblower_cdi_060601/20060608/

2006 Aug Securities and exchange commissioned launched an informal inquiry into stock option granting practices at Corinthian colleges,

2006 June Florida AG office widened its investigation of Florida Metropolitan University

2006 June, National Consumer law Center of Boston Ma Publishes its report, "No way out: Student loans, Financial distress and need for policy reform. This PDF file is 53 pages long and the report itself was originaly 49 pages. The purpose of the paper was to discuss why students find themselves in default, and why their problems spiral out of control so quickly.
This paper calls for restoring a reasonable staute of limitations for student loans, and acknowledges that the removal of the statute of limitations put studentloans in a rare catatgory equal to those guilty of murders, traitors and a few civil laws. It notes that even rapists have statute of limitations.


2006 Jan http://www.usatoday.com/money/perfi/general/2006-02-22-student-loans-usat_x.htm Article on suffrage of students.
Students suffocate under tens of thousands in loans. In 1981, a student could work full time all summer at minimum wage and earn about two-thirds of annual college costs, according to an analysis by Heather Boushey, economist for the Center for Economic and Policy Research. Today, a student earning minimum wage would have to work full time for a year to afford one year of education at a four-year public university — and that assumes she saves every penny, Boushey concluded. Tom Dillon, 19, a pre-pharmacy major at the University of Connecticut, is carrying $52,000 in student loans. And he's just getting started. When he gets his pharmacy doctorate in four years, he expects his debt to exceed $150,000. John Reykdal says all his friends have student loans and predicts that the higher rates will force many future graduates to spend years paying off their debts. "Their student loans will double by the time they pay them off, just on interest alone," he says. "It makes me really worry about the future."

2006 New York State education department orders Taylor business Institute a commercial 2 year business college to close as of Jan 2007. Amongst other things, a high attrition rate of 80 percent, lead to the decision.

2005 Nov New Jersey Dept of Labor and Workforce Development issued letter to Sanford Brown Institute-Iselin, owned by Career Education Corp, over allegations raised in 60 Minutes Television show report on for profit colleges.

2005 Nov Kentucky’s AG asked a court to strip Decker College, a for profit school, of its charter. Kentucky’s officials revealed widespread fraud and abuse.

2005 Aug Group of students have filed suit against ECPI college of Technology in Greenville, SC alleging that the school is a “Fraud and a Sham”.

2005 Aug Pennsylvania AG office has begun investigation of Lehigh Valley College owned by Career Education Corp, into business practices of the school.

2005 May Corinthian Colleges ordered to repay 776,241 to USDE for violations of Student aid procedures at Bryman college.

2005 April Washing State HECB bars two BCTI presidents from ever again operating a school accredited by that Council.

2005 Mar Washington State Higher Education Coordinating Board, orders BCTI ordered to pay 63,000 in state need grants for low income students after the school admitted falsifying enrollment tests to admit unqualified students.

2005 March US House of Representative from California, Representative Maxine Waters, gives testimony before the Committee on Education and the Workforce and Full Committee Hearing on “Enforcement of Federal Anti-Fraud Laws in For-Profit Education”, about the problem with proprietary trade schools. Again, showing the students to be victims of student loan abuse by the for profit schools.

2005 Feb. www.encyclopedia.com/doc/1G1-129027838.html Corinthian Colleges accused of fraud. Former employees of Corinthian Colleges Inc. have alleged that the company routinely falsified students' financial-aid applications in order to win federal funds, according to an amended lawsuit filed in federal court in Los Angeles. The allegations by the former employees, who are not identified by name, are described in a complaint filed Thursday by the class-action law firm Milberg Weiss Bershad & Schulman LLP.

2005. Private student loans are added to the list of non bankruptcy discharge able student loans.

2004 Nov. The California attorney generals office examines allegations of fraud against a number of for profit schools, including ITT and Corinthian.

2004 University of Phoenix paid 9.8 million to settle investigation by USDE into recruiting practices that violated the ban on commissioned sales.

2004 – Taxpayer-Teacher Protection Act of 2004 suspended for one year the ability of
certain FFELP lenders to expand the number of federally-backed loans that are
guaranteed a 9.5 percent return. This is expected to be made permanent when HEA is reauthorized in 2005.

2003 Jan New York State Comptrollers office begins an audit of Devry New York’s compliance with the NY State tuition Assistance program Grant requirements for the 3 year period ending in June 2002. Devry ended up paying back an undisclosed amount.

2003-2006 Various federal agencies including USDE, SEC, and FTC launch investigations into for profit colleges for violations of HEA and other federal laws. USDE announces 9.8 million settlement with Apollo Group citing multiple and flagrant violations of ban on incentive based recruiting and admission.

60 minutes tv show, Arizona Republic, New York Times, Financial times, Portland Oregonian, and other media report on alleged recruitment violations in the for profit sector.

Regular news reports from news media sources nation wide illustrate a return to the fraudulent practices of the past and subsequent legal action taken by students and shareholders.

2002 June 11, National Consumer Law Center, (NCLC) makes comments and objections to administrative garnishments on student loans. Says they are concerned for the due process students would get under proposed regulations. And points out that for the first time, the USDE is utilizing the Dept collection improvement act, of 1996, codified at 31USC3720D.

http://www.consumerlaw.org/initiatives/test_and_comm/061102_DL.shtml
NCLC makes its objections and concerns clear, some of which are:
1. Objects to the percentages of garnishments.
2. Concerned about the use of private contractors to be used.
3. Object to the lack of clear standards for hearing officers.
4. Section 34.14 of the proposed regulations do not protect constitutional due process rights as far as clear and precise determination is concerned.
5. Objects to the use of oral hearings, unless student can show cause why resolution cannot be obtained via paper hearing.
6. Defenses to garnishment clauses are incomplete.
7. Concerned about the number of specific provisions for hardship defense.
8. Object to multiple garnishment orders.
9. Confusion over garnishment regulations.

2002. 38 billion dollars is borrowed in Federal student loans by 5.8 million Americans.

2001. March. Dreams protected: A new approach to policing proprietary schools' misrepresentations Georgetown Law Journal, Mar 2001 by Linehan, Patrick F
Mr. Linehan, publishes a 20 page report on the predatory practices of proprietary schools.
http://findarticles.com/p/articles/mi_qa3805/is_200103/ai_n8931568/pg_1 Although this article appears in 2001, it covers the time from 1980 to 2000. And is a highly recommended read for anyone who wants to understand what happened to so many students during the 1980s.

2001-2002 USDE conducts negotiated rule making which 12 safe harbors to the incentive compensation ban are proposed.

1999. Section 523(a)(8) of the US bankruptcy laws changed for a second time, concerning student loans. The 7 year bankruptcy wait is extended to infinity. That is to say, Student loans are non dischargeable in bankruptcy unless undue hardship can be shown. However, what constitutes "undue hardship" is never made clear. And each Federal court circuit has its own definition.

1999 GAO report says default rates need to be reported more appropriately.
GAO/HEHS-99-135 Computing Default Rates Appropriately.

1999-2001 The office of Inspector General of the US Dept of Education (USDE) finds violations at multiple institutions (most not-for profit) that had contracts with Apollo group for recruiting students.


A 1989-90 Senate investigation headed by Sen. Sam Nunn (D-Ga.) blasted the department for running a multimillion-dollar loan operation with a computer data system that contained incomplete, inaccurate and unreliable information. ''For more than 15 years the department has tried to build a student loan data base and failed over and over again,'' says the Council on Education's Atwell. ''They have absolutely no idea who is holding loans or where they live.'' Nor has the DOE kept tabs on the 10,000 primary lenders and the 64 institutions operating in the secondary market. These firms, such as Sallie Mae (Student Loan Marketing Association), purchase loans from the original lenders and service them. As one result, Senate investigators found that eight out of 10 lenders were not following DOE procedures -- for example, mailing at least six collection notices to a borrower within a six-month period and making ''diligent'' phone calls to collect before declaring a loan in default. Testified chief investigator David Buckley: ''We were told, time and time again, that given the profits being made, there is inadequate government oversight of the lenders.'' The DOE claims to have made improvements since the Senate report.

The DOE has started turning over defaulters' Social Security numbers to the three dominant credit bureaus (TRW Information Services, Equifax and Trans Union). If you have ever been plagued by a bad credit report, you know just how difficult that can make life. ''We really wreck them,'' says Jean Frohlicher, executive director of the National Council of Higher Education Loan Programs, an association of loan services and secondary market firms. Clearly, tougher penalties for defaulters and tighter screening of schools and lenders can start to clean up this mess. But there's more work to do. Congress and the DOE should: -- Force the lenders to take more responsibility for student loans. The best way to achieve that is to stop reimbursing them 100%. One idea: 80%. ''This would surely heighten the lenders' interest in reducing defaults,'' says Sen. Nunn. -- Create an information clearinghouse. ''Students need a single source to call to update their status, clear up problems or locate the holder of their loan,'' says Sallie Mae's chief executive, Lawrence Hough. -- Require colleges and universities to make sure students truly understand their loan responsibilities. -- Make the interest on college loans tax deductible. This proposal, put forward by President Bush in his State of the Union address, would help millions of young people repay their debts. For example, the deduction would save Singel, who faces yearly bills of $1,970, nearly 10%, assuming she is in the 15% tax bracket. And that 10% might be just enough to save you, me and our fellow taxpayers from having to swallow yet another tuition bill.


1993 – FDLP becomes a full-scale program under the Student Loan Reform Act. Loans
would be financed and managed directly by the federal government and an income
contingent repayment process was added.

1992 May Money magazine contributor y KERRY HANNON Reporter associate: Vanessa O'Connell May 1, 1992 Reports that students are getting stiffed by student loans. The article in part reports:
Gary Lynn (right), a 34-year-old marketing consultant in Troy, N.Y., finally paid off his $9,959.62 in student loans that he thought he had paid off. An indignant Lynn insists: ''I wrote about a dozen letters to faceless, nameless people and could never find out how much I owed or to whom. At one point I was even getting bills from two different creditors. Then they got my account confused with another student's loan. I called more than 20 times asking for information. But when the collection agency finally called me last year, all they said was, 'Look, you are seriously delinquent, and we're going to start proceedings against you.' '' Lynn figures he shouldn't have to pay interest or penalties for the years he tried to sort out the confusion.

''The managerial competence of the Department of Education is a real question mark,'' says Thomas Wolanin, staff director of the House Subcommittee on Postsecondary Education. ''We are not talking here about a well-oiled machine.

All told since 1965, when the Higher Education Act created the loan program, taxpayers have footed the bill for around $17 billion in defaulted loans -- and these numbers are mounting fast.

The grim facts: -- There have been 62 million loans made since 1965, and an estimated 10 million students have defaulted. From 1988 to 1990, the annual default rate has climbed from 17% to 20%. -- With tuition, fees, and room and board running $10,000 to $20,000 a year at most four-year private colleges (up from $5,947 in 1981) and averaging $5,500 at public colleges, more applicants than ever are seeking federal loans (maximum four-year limit for undergraduate students: $17,250, up from $10,000 in 1986). ''We have created a new indentured class in the United States -- the student debtor,'' says Rep. William Ford (D-Mich.), chairman of the House Education and Labor Committee. -- A 1991 General Accounting Office study indicates that more than 25% of the defaulters earn enough ($15,000 or more) to make loan payments.

BULLL CRUD!. Where I lived, 15K per year would not give you enough to have a proper apartment and a car payment at the same time.. Ford is out of touch with reality. (Remember this was in 1992). Furthermore, the new William D Ford pay off option, based on income, is not a real solution. If you cannot afford to make payments that pay off the interest, it all keeps adding up and at the end you owe the IRS income tax on the balance due, which in many cases, will be more than the original loans. So the problem just switches from the USDE to the IRS. That is no solution; it’s a continuation of the victimization of students.

Why have defaults exploded? Fraud is part of the answer. Callousness accounts for much of the rest. Since 1980, when the government program was amended to allow students who have not completed high school to get student aid, federal loans have proved a bonanza for trade school operators who simply take the money and run. And don't think trade school swindlers are found only in beauty academies and air- conditioner maintenance courses. They also operate business and computer- training schools. From 1982 to 1988, loan volume to trade school students increased six fold. At the same time, the number of DOE reviews of schools eligible for aid fell from 721 in 1984 to 417 in 1986. The result: Today, trade school students account for around 35% of defaults, and the numbers continue to increase. The DOE's weak oversight has allowed scam artists to prey on students.

Secure in the fact that the loans are risk-free for them, some lenders put little effort into collecting. They know that if a borrower goes for six months without making a payment, the government will pay them back -- with interest -- and that they will have avoided the high cost of servicing the loan. ''It is convenient when a loan gets in trouble to hand it back to the feds, get their money and get out,'' says Robert Atwell, president of the American Council on Education


1992 – GSLP program was renamed the Federal Family Education Loan Program
(FFELP) in the 1992 HEA reauthorization. FFELP is a public-private partnership that
provides affordable private sector financing for students and their families seeking
postsecondary education. The Direct Lending pilot project was created.

1992 Congress finally acts, due to pressure and high default rates, passes ban on paying commissions to admission and financial aid officers. The Act bans commissions, bonus, or other incentive payments based on success in ensuring enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities. 20USC1904(a)(20). Yet still no relief for the victims of Student loan farming by predatory trade schools.


1991 May US senate Subcommittee on investigations, committee on government affairs, senate Report R-102-58, covers the Higher education Act, and student loan industry.
Reports on the abuses of the Federal student loan program. Senator Sam Nunn, Dem, Georgia testifies that the congress knew back in 1975, that some of those for profit schools were selling worthless educations, leaving the students with debts they could not pay, amongst other things reported. See report for full disclosure of facts. Yet no relief for those students is offered to this day. The report clearly shows the students as victims, under Section 3, Subsection E on page 11. Again, no remedy or relief is ever offered to these students who suffer to this very day, including the author of this timeline.

1991. The Emergency Unemployment compensation act of 1991, (P.L. 102-164), amended the Higher Education Act of 1965 to include section 448(a) which Now allows the U.S. Department of Education to require employers who employ an individual who is not repaying their defaulted student loans, to begin deducting 10 percent of the debtor's take-home pay in order to recover the entire balance due. Under this authority, no legal action is required to obtain administrative cooperation from the employer.

Note: this notice does not say how the term "employer" is being defined. It does however, admit that your rights as guaranteed by the US constitution are going to be violated willfully by the very government that is sworn to uphold them. Specifically your rights under the 4th, 5th, and 7th amendments to the national charter.

1991, GAO report: In Student Loans: Characteristics of Defaulted Borrowers in the Stafford Student Loan Program, the GAO identified nine defaulter characteristics most frequently cited in published studies of defaults. These are:
1. attended vocational/trade schools
2. had low incomes
3. had little financial support
4. had minority backgrounds
5. lacked high school diplomas
6. failed to complete education programs
7. attended school for one year or less
8. borrowed small amounts
9. were unemployed when defaulting.
Defaulter characteristics cannot be used to predict who will default. An often misunderstood fact about default is that while most defaulters have certain characteristics, the majority of borrowers with these characteristics do not default on their loans.

Note: Most defaultres who have those charcteristics DO indeed default, but they do so past the 2 year record keeping practices of the Dept of Ed. These students tend to default within the range of 3-7 years after leaving school.

1990. Approximately 11.7 billion is borrowed for student loans.

1990. Section 439A of Higher Education Act of 1965 is Amended. The waiting period to file bankruptcy is extended to 7 years.

1990. Section 523(a)(8) of the US bankruptcy laws changed. It is also changed in 1998 and 2005. The comprehensive overhaul of the US bankruptcy code enacted in 1978 that treatment of student loans then became addressed under the bankruptcy laws, specifically section 523(a)(8). Proponents of this re writing of the law, claimed that congress was treating student loans the same way they did people who were charged with fraud, felony and alimony dodging, and that the actions by the congress in limiting discharge ability of student loans were fighting a scandal that existed only in their imagination.

1990 Feb Inspector Generals report says that 87 percent of student loan lenders have serious procedural violations and abuses of students

1998 New wage garnishment law, allowing wage garnishment without a court order is now put into effect by the Dept of Education.

1989 LA TIMES article Reports Bank of America put away close to 100 million to cover looses involving student loans.

1987 – GSLP was renamed Stafford Loans in honor of Senator Robert Stafford (R-Vt.).

1986. Section 439A of the Higher Education act of 1965 is amended to impose a 5 year waiting period on defaulted student loans before a student can file for bankruptcy protection unless the student can claim "undue hardship". Undue hardship is never defined.

1986 – Reauthorization of the Higher Education Act gave financial aid administrators
broader discretion and ability to use "professional judgment" on loans; required financial need for the GSLP interest subsidy; NDSL was renamed Perkins Loan; Supplemental Loan to Students (SLS) for graduate, professional and independent students was created; PLUS loans to parent borrowers were restricted.

1983 – 1987 United Education and Software, the service company for FITCO, (First Independent Trust Co.) was found to have hundreds of boxes of unopened returned mail in a warehouse, and also found thousands of unopened and unprocessed requests for forbearances. These thousands of requests for forbearance’s put the students in default because a loan service provider failed to do its job (again).

1983 – Student Loan Consolidation and Technical Amendments Act approved, which
allowed borrowers to consolidate multiple loans into a single loan with a longer
repayment term and smaller monthly payments.

1980-1992 Some for profit colleges abuse student aid programs by using high pressure sales tactics to enroll students under false pretenses, yielding no educational benefit to students, ad resulting in losses of hundreds of millions of dollars to students and taxpayer s thru defaulted loans and wasted financial aid. Students of this era are classified as victims of student loan farming by some members of congress. Yet no relief for the students is ever offered and even today, they are being hounded to pay loans that have ballooned in some cases to over 7 times their original value..


1980 – Parent Loans for Undergraduates (PLUS) approved, which allowed parents of
dependent undergraduate students to obtain low-interest loans to pay for their children's college education.

1980’s. Proprietary school (private trade schools) loans at one time defaulted at a rate of 5 times that of traditional 2 and 4 year colleges.

1980-1989 First Independent Trust of Sacramento California writes an estimated 1.5 billion in Government Guaranteed student loans. And later files bankruptcy.

1979 – The Department of Education (DoED) was created, P.L. 96-88.


1972 – Student Loan Marketing Association (Sallie Mae) was created; Basic Educational
Opportunity Grant (BEOG), now the Pell Grant, was established; Education Amendments
of 1972 were enacted (federal matching grants for state incentive grants).


1969 National Education Center, Olympia, Everest, Corinthian Colleges.
http://www.cci.edu/directory/National-Institute-of-Technology.phpThe history of National Institute of Technology (NIT) is diverse. Each campus was acquired individually; however, together they comprise a national school system providing students with a total educational experience. National Institute of Technology in Long Beach, California, was originally founded in 1969 as the Rosston School. In 1986, the school was acquired by Educorp, Inc. and renamed as Educorp Career College. Corinthian Schools, Inc. (CSI) acquired the campus in 2000 and subsequently changed the name of the campus to National Institute of Technology. Corinthian Schools, Inc. is a division of Corinthian Colleges, Inc. (CCI). Corinthian Colleges, Inc. is one of the largest postsecondary school organizations in the United States, operating more than 80 colleges and institutions across the country and is and has been the target for numerous civil cases and investigations for violating laws.

1966 – National Association of Student Financial Aid Administrators (NASFAA) was
created.

This is the earliest I have any records of the Historical time line for student loans. And back in 1966, I was just starting life.