With student loan debt at nearly $1.5 trillion, some for profit-schools and student loan providers have built entire companies whose sole purpose is to try to exploit not only the system but also unwitting students, in efforts to boost their bottom line.
Partly as a result of this greedy exploitation, nearly 4.6 million borrowers are in default. The ease with which students can obtain student loans has helped to spawn an insidious array of schools and student loan providers who have found easy money by targeting impoverished neighborhoods, military vets, and students who may not qualify academically. They allegedly use high-pressure tactics and illegal recruiting schemes to try to entice these student hopefuls to their schools.
In 2016, the Department of Justice (DOJ) settled with several for-profit schools that allegedly participated in illegal schemes to secure federal education funds.
As part of a $95.5 million federal and state settlement, the government ordered Education Management Corp. in 2015 to pay more than $52 million to resolve allegations that it unlawfully recruited students, engaged in deceptive and misleading recruiting practices, and falsely certified compliance with Title IV of the Higher Education Act and state laws that prohibited such conduct. The company is the second largest for-profit education company in the U.S.
Closer to home, the for-profit Charlotte School of Law (which closed in 2017) was engaged in related practices and faces similar allegations in individual and class action law suits.