Release: Healey Unveils Plan to Combat Student Loan Predators

Enforcement, Regulations, Legislation to Curb Deceptive For-Profit Schools

BOSTON — Democratic candidate for Attorney General Maura Healey today unveiled an aggressive plan to target the emerging scourge of predatory for-profit schools luring students into loans they can ill-afford and, taking cues from the worst mortgage lenders, leaving empty promises, mountains of debt and crushing costs to taxpayers.

Highlighting an issue she has already joined Attorney General Martha Coakley in tackling to benefit Massachusetts students and taxpayers, Healey vowed to lead the nation in a crackdown on unscrupulous institutions, which often prey on lower-income and minority students and veterans.  

“This is the age-old ploy of predators who helped tank our housing market, leaving countless borrowers buried in debt and communities reeling,” Healey said.

“We wish we had stopped that financial shell game before it took hold. But we have a chance to make sure we aren’t burned again – this time by the emerging for-profit schools targeting our most vulnerable students, honing in on gateway cities and adding to the growing burden of student debt.”

Healey’s plan, detailed in an opinion column in The Boston Globe’s Podium section, includes three primary strategies - stronger regulations, increased enforcement and nation-leading legislation at the State House and in Congress.

Calling the schools’ tactics a “definition of a public policy disaster,” Healey said our next Attorney General has a “moral” responsibility to lead on this issue, and to make sure that those seeking economic mobility through education aren’t instead set further back by predatory practices. She noted a U.S. Senate committee report that for-profit colleges took in $32 billion in taxpayer-backed loans and spent nearly 25 percent on marketing and recruiting – which dwarfs the less than 1 percent often spent by non-profit colleges.

Dropout rates at these schools often top 50 percent, leaving students with a pile of debt and nothing to show for it, Healey noted. Despite enrolling only 13 percent of borrowers, for-profit colleges are responsible for nearly half of all student loan defaults.

“Too often, recruitment is the only thing these for-profit schools do well,” Healey said.

Massachusetts has begun to aggressively address the issue. When Healey led Coakley’s Public Protection Bureau, the AG sued a for-profit school that aggressively recruited students with false promises of high earnings and misrepresented its courses and facilities. It eventually agreed to repay student borrowers $425,000. The corporation that owns Everest Institute in Chelsea was recently accused of using deceptive advertising to target vulnerable populations, including low-income single mothers and returning combat veterans by the California Attorney General.

Healey’s plan includes: 

  • Quickly enacting Attorney General Coakley’s proposed regulations to explicitly prohibit egregious sales tactics and expand public awareness initiatives to help more people predatory programs.
  • Acting aggressively to take on schools whose recruiters lie to prospective students and increase enforcement actions to ensure they behave – even when they think no one is watching.
  • Pursuing legislation that will give students unprecedented assistance and protections from predatory schools. Healey vowed to partner with legislators to expand the partial tuition refunds now available to trade school students when they withdraw so that they cover all for-profit school students, and to amend the state’s education grant and loan programs to prohibit funds from being wasted at schools that have a track record of failing students. 
  • Pushing Congress to act on national measures. Healey promised to work with Senators Warren and Markey and members of the House delegation as well as state attorneys general around the nation to advocate for changes to the federal student loan programs that will better protect students and shutter predatory schools that set up shop in our communities.

Toby Merrill, director of the Project on Predatory Student Lending at The Legal Services Center of Harvard Law School praised Healey’s plan saying, “Taking on predatory schools in Massachusetts should be a central priority for the next Attorney General. We need to hold these schools accountable for the promises they make. Maura Healey’s plan would do a lot to help my clients and should be the policy of the state.”

“I’m so pleased a candidate like Maura Healey is stepping up to help people who are suffering because of the greed and shady tactics of these for-profit schools,” said Vanessa German, a Dorchester mother of three who found herself more than $12,000 in debt with nothing to show for it after being misled by a for-profit school.

“There’s too much at stake not to act,” Healey said. “We should do everything we can to make sure Massachusetts leads in education and that every resident has the opportunity to succeed. This plan is part of ensuring that.”