Defrauded Students Getting Debt Relief—25 Years Later

Government settles lawsuit filed by students of shuttered for-profit college
By Arden Dier,  Newser Staff
Posted Aug 10, 2017 7:11 PM CDT

(Newser) – One of the largest for-profit college chains in the US was shuttered in 1994 after federal investigations revealed it had defrauded thousands of students by falsely certifying them for federal loans. Ever since, the US government has been collecting on federal student loan debt left behind by students of Wilfred American Educational Corporation. For Evelyn Rivera, who recalls seeing her $2,000 investment vanish when her Wilfred school closed in the 1990s, that's meant watching her debt balloon to $45,000, reports the New York Times. But finally, students like Rivera are getting relief. A settlement reached Tuesday means the government will allow 60,000 former Wilfred students to petition to cancel debt from federal loans taken out between 1986 and 1994.

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Students will also be eligible to receive refunds for previous payments under the settlement, which resolves a 2014 class-action lawsuit from former Wilfred students that accused the government of collecting on loans it knew should've been forgiven under a 1992 federal law. That law applies in cases in which schools falsely certified students as eligible for loans. While Rivera previously filed for loan forgiveness, she was one of only 100 Wilfred students to do so. Most others likely weren't aware loan forgiveness was available, reports the Times. Under the settlement, which Bloomberg previously reported was in the works, the Department of Education is now required to notify former students of assistance and suspend loan collection while the proper applications are filed. (Read more student debt stories.)

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