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Last month, when more than 200,000 students were victims of misconduct by their colleges He started getting the news After their federal student loans were canceled, Amanda Luciano felt a sense of satisfaction — and the pangs of despair.
The students receiving the good news were just like it—struggling with student debt because they were defrauded by a for-profit college—with one difference, a difference that didn’t seem to matter until recently. When she needed money to start college, she was advised to borrow from a private lender instead of the federal government, and because of this, she became stuck in $81,000 in debt.
“I’m down, what do I do? I’d be in the same position as these other people if my loans were federal,” said Luciano, now 37. “Of course, I’m very happy for these people, but it’s crazy to have no one to hold us accountable. private sector [loan] the people.”
Last fall, a federal judge ruled, V Sweet against Cardona, that former students from more than 150 colleges (mostly for-profit institutions) who have filed what is known as a borrower defense to demand repayment are entitled to automatic loan revocation, and such is the extent of those colleges’ misconduct. But when the final legal hurdle was cleared in February, her debts erased, Luciano—and tens of thousands of private loan borrowers like her—were shut out.
the Colony It came after a class-action lawsuit filed in 2018 that alleged the government unfairly delayed awarding relief to students who were defrauded by their colleges. Although consumer protection applies to private lenders as well as the government, the legal mechanism that can result in private education loan borrowers being forgiven differs from that used in sweet Case, which sought relief only for students with government loans.
Back in 2006, when Luciano was looking for degrees that would lead to a good job in the fashion industry, she came across the website of the International Academy of Design and Technology, or IADT. She said the college boosted its national accreditation and promised a path to a lucrative career in design and marketing. While visiting the Chicago campus, Luciano met with a financial aid counselor to help her figure out how to pay for college. The chancellor even got a representative from private lender Sally Mae on speakerphone to explain how easy it would be to pay off her loans after she graduated.
Luciano, nineteen years old and the first in her family to attend university, asked her grandfather to sign the loan and made up his mind. The degree proved worthless.
borrowed $51,000; Over the past 15 years, she says she has paid back a total of $41,000. But because of the interest, today her balance is $81,000. She says her current monthly payment of $500 only covers interest.
said Eileen Connor, director The Predatory Student Lending Project Who like the former students who started getting relief last month. “They have similar rights to rescission. There is no logical reason to explain why one loan is enforceable and the other is not.”
Although the private student loan market is much smaller than the federal market, it’s still very large — more than $127 billion is owed by private student loan borrowers, and defaults have skyrocketed over the past two years.
After Luciano graduated from high school, she initially attended nearby Joliet Junior College, unsure of what exactly she wanted to do but interested in teaching. She kept her job at the local Big Lots, where she worked during high school. Living at home, she scheduled her classes in the morning and mostly worked from 1 to 9 p.m. She was able to earn enough to pay Juliet’s tuition out of pocket.
During the third semester, I took a class on fashion merchandising and fell in love with it. She said she felt like she had found her calling, but there weren’t many Juliette fashion lessons. That’s when I went online to see if a degree in fashion was possible and found that IADT promises exactly that – a train ride away.
She visited the school and the admissions representative reiterated what the site promised: A certification from IADT will lead to a career as a buyer, fashion designer, or virtual merchandiser, depending on which path you choose.
They literally listed what would be available to us. “They made it look like they got this degree and here are the jobs you could get,” said Luciano. “So of course, I was like, ‘This sounds perfect.'”
Luciano says the IADT financial aid officer never mentioned the federal loan option and told her a private loan was her best option because it would also give her money for living expenses.
“My thinking was this is kind of what you have to do — get a college degree to get a good-paying job,” she said.
Luciano’s interest rate is now over 9 percent and it’s not fixed, so it’s gone up and down over the years. The current interest rate on federal student loans is 5 percent, and once a student borrows, it doesn’t change over time.
After Luciano graduated from IADT in 2008, she searched for jobs in the fashion industry for several years.
She noted that the IADT “promised networking opportunities, high-paying jobs in our industry, and even training opportunities that lead to positions in industry.”
She said she called the school’s career services office at least once a week, but they sent her job listings that are easy to find on any job website.
“I never thought of asking the school why all this was happening,” she said. “I just thought I needed to do more and keep looking.”
I looked for jobs at stores close to the company’s headquarters, constantly checking their websites to see if they were hiring, but jobs were few and far between. She had interviewed one at retail giant Claire’s for a buy position, but they were looking for someone with more experience.
In three years of searching, she never made anything more than $13 an hour at Kohl’s retail store as a clothing supervisor, which didn’t require a degree.
“That was all I could find on job boards,” she said. I kept going back to school, but there was nothing. I finally realized that this degree is worth nothing at all.”
She returns home with her mother and eventually decides to cut her losses. In 2011, she enrolled at DuPage College—a nearby community college—and became certified to teach preschool. She took out federal student loans to pay for the program.
“It was very frustrating,” she said. “And then he found out that this school — my school — was part of this predatory scam. After hearing that, I can’t believe I’m still paying for it.”
In 2012, when Luciano began teaching preschool, the average annual salary for IADT graduates in Chicago was only $25,000 ten years after graduation, and more than half of students with federal loans were either late or in default after Five years from the start of repayment. In 2015, eight out of ten college bachelor’s degree programs failed a government test for “gainful employment”—a measure that looks at whether students are, on average, earning enough to pay off their loans. In 2017, the year the college closed, 75 percent of its students who took out federal loans were delinquent or in default.
These borrowers — those with federal loans — receive forgiveness from sweet Settlement, and while the wait was long, they got a break during the pandemic. They haven’t had to make payments since March 2020, and no interest has been added since then. Luciano, whose loans Navient has of its own, was allowed an 18-month moratorium, but her interest continued to increase during that time. The company offers patience for economic hardship, but Luciano used up what was available when her son, now 6, was born prematurely and she couldn’t work full time.
A Navient representative declined to comment on Luciano’s situation, citing privacy concerns, and said that individuals with private loans facing repayment challenges should contact their services to inquire about available options.
Connor, of the Predatory Student Lending Project, says she’s looking at ways to help students like Luciano.
Meanwhile, Luciano, now a mother of two, watched fellow students from the IATD post photos to Facebook of emails they had received alerting them to the complete cancellation of the loan.
“I feel so sorry,” she said, “every day.” “I just keep pushing, but I’m never going to get rid of it.”