Devry University was sued by the Consumer Financial Protection Bureau, which is the consumer protection agency of the U.S. Department of Education. The complaint alleged that the school’s advertising department did not verify that information on student loan programs was accurate. This resulted in false claims by the school and its affiliated lender that enrolled students could earn thousands of dollars in government student loan forgiveness grants. These false claims caused a rush of financially stressed college students to sign up for these programs. The influx of students helped to significantly boost revenues for Devry University, resulting in a profit increase.
In response to the complaint, the corporation settled the lawsuit by agreeing to refund at least some of the money it had profited from the illegal student loan program. The corporation also agreed to not misrepresent the value of federal student loans in advertisements or letters intended for consumers. Specifically, the agreement requires Devry University not to advertise a $10,000 grant that students can obtain to pay off their federal loans. The fine print of the agreement also requires Devry to stop issuing statements that promise a student will be able to receive a grant to pay off all of his or her student loans, a promise the lending institution will enforce if they receive a complaint from the CFPB. In addition, the agreement requires Devry to issue an apology to customers who were misled by the false claims and advertising.
To ensure that the agreement works to benefit borrowers, Devry has agreed to implement guidelines that allow borrowers to increase their chances of obtaining forgiveness of their federal student loans. Specifically, the guidelines call for the institution to verify the income and employment history of each borrower who seeks to reduce or eliminate interest on their loans. Borrowers must also provide documentation of their financial hardships before they can apply. Finally, borrowers must complete the application and paperwork associated with their federal student loans completely.
As previously mentioned, one of the ways that borrowers can increase their chances of forgiveness is by working with a credit counselor. By working with a credit counselor, borrowers can work to consolidate their debts and lower their monthly payment obligations. However, there are some circumstances where a Devry student loan debtor may not qualify for consolidation. Specifically, if a borrower filed for bankruptcy in the past five years, he or she may not be eligible for a loan debt consolidation through Devry University.
The business model at Devry University has garnered criticism in some quarters. Schools such as Kaplan University and College count among its for-profit educational partners. Critics argue that for-profit schools do not always offer quality education and that the Devry University is no exception. Moreover, the Justice Department has threatened to shut down for-profit Corinthian Colleges due to its involvement with a for-profit college scam. Devry has vocally opposed the shuttering of Corinthian Colleges, but the Department of Education has yet to announce plans to move ahead with the investigation.
The Department of Education’s investigation into Devry University has come at a time when many student loan debt relief companies are in jeopardy of closure. Many of these companies have been hit hard by the recent economic downturn and are scrambling to figure out how to survive in a devastated economy. In response to the dire situation, many student loan debt relief companies have received instruction from the federal government to work with borrowers instead of shutting down. In addition to seeking student loan debt relief assistance, these companies are also working feverishly to secure additional funding in order to keep their doors open.
It is important for borrowers to realize that while the debt burden may feel heavy, they are not alone. There are a number of other debt relief options besides student loans and bankruptcy. If a borrower feels that he or she needs to work with a repayment plan to ease the financial burden, it is advisable to talk with an experienced and reputable debt settlement company. These companies are often able to negotiate a borrower’s interest rates, penalty fees and even principal back to an acceptable level.
The Department of Education has not yet announced what it will do next with Corinthian Colleges. While no announcement has been made, it is clear that the Department of Education is considering taking aggressive action. Borrowers who wish to learn more about federal loans and a student loan debt relief strategy should consult an experienced student loan help organization. A student loan help organization can inform borrowers of their rights as well as provide valuable information on alternative repayment plans. By acting quickly, borrowers can save their credit and avoid the embarrassment of facing the world after graduating from college without the finances they need.