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So far it has agreed to cancel nearly $28m of debt for 1,300 former students of Corinthian Colleges

So far it has agreed to cancel nearly $28m of debt for 1,300 former students of Corinthian Colleges

The US education department has created an enforcement unit to target institutions that lure students in with deceptive marketing, sign them up for courses for which they lack the skills, or request federal financial aid for them dishonestly. Ted Mitchell, undersecretary at the education department, says the number of vulnerable borrowers has risen partly because colleges are admitting more adult students, including single mothers and military veterans in their twenties and thirties.

This tier of people tends to be lower income than the traditional middle-class student, whose parents drop them off in the family minivan at a two or four-year institution, Mr Mitchell says. So not only is more of the weight falling on students and families, but it’s falling on an increasingly less well-off population . . . and they don’t have the wealth buffer to fall back on.

Seeking forgiveness

personal loans to pay off taxes

America’s student debt woes have their roots in the recession, which delivered a triple blow by forcing students to take on more borrowing, even as struggling states cut support for tuition and job opportunities diminished for graduates.

Under the US system, the federal government and states provide grants and loans to students, but state governments have cut funding in recent years.

The federal government’s loans, which have low interest rates and do not require credit checks, go direct to students and are administered by the education department and funded by the Treasury

For-profit colleges have flourished since the start of the 2000s by meeting demand for higher education that existing public and non-profit institutions could not satisfy. (more…)