Finkenauer Announces Bill to Help Defrauded Students

July 8, 2019
Press Release

CEDAR RAPIDS – Today, Congresswoman Abby Finkenauer (IA-01) announced that she is helping introduce legislation to assist hardworking Iowans who have been defrauded by educational institutions with deceptive practices. The Relief for Defrauded Students Act of 2019 ensures that students who have been scammed by predatory colleges can seek relief for their federal loans.

While the protection –known as the Borrower Defense rule— exists as a regulation, the Department of Education has not been enforcing it, despite being ordered to by a federal court. Currently, the Department of Education is ignoring over 158,000 claims, leaving students – many of whom are single parents, veterans, and military spouses—to face extreme financial hardship without the required protections. These include over 19,000 claims from individuals who attended ITT Tech, a now-defunct for-profit college with a shuttered Cedar Rapids campus.

“This is about standing up for hardworking Iowans who are trying to build a better life for themselves and their families,” said Finkenauer. “It’s absolutely unconscionable that predatory institutions would take advantage of these folks. Answering to their Wall Street investors, they promised students a pathway to good jobs and financial security but did everything they could to mislead them and leave them—and taxpayers— on the hook with tens of thousands of dollars of bad loans. That’s not how you treat people and it’s important that we enforce the protections that are on the books so that we can get people the relief they’re owed so they can begin to rebuild their lives.”

Finkenauer was joined on the Kirkwood Community College campus in Cedar Rapids by Kirkwood’s president, Dr. Lori Sundberg, and by Jeff O’Brien, a Cedar Rapids construction manager and seven-year Army Reservist, who would benefit from the legislation. He was told, four months into his degree at ITT Tech, that his degree no longer existed. Just before he was about to graduate, he learned that ITT had mismanaged his classes required for graduation and that he was missing a course. Three days later, the school closed and – at the end of the week—Mr. O’Brien was deployed abroad.

 “ITT Technical Institute did nothing for me but take my time and money,” said Mr. O’Brien. “This bill would allow me to save for retirement, pay off the house, or hopefully one day expand my family.”

Julie Rohret, a 32-year old mother who was also defrauded by ITT Tech would also benefit from the legislation. "I was told that class size was limited, that I was just the student they were looking for, that their career and job placement was unmatched by any others in the industry, and that I would be getting the most affordable and cutting-edge education in the field,” said Ms. Rohret. “I was wrongly promised the world, and, looking back now as a 32-year-old woman drowning in student loan debt, I just feel defeated.” Ms. Rohret called the legislation her family’s “hope for a better future.”

“In short, we support legislation that makes it easier for students to borrow and repay their loans, and we will continue to educate students on financial aid resources and money management with the goal of reducing loan indebtedness,” said Dr. Sundberg. “Our focus is student success so that means working individually with students to understand the impact of their financial decisions.”

The legislation has also been endorsed by the Iowa State Education Association. 
“As Iowa educators, we put students at the center of everything we do and are committed to helping them create better lives for themselves," said Iowa State Education Association President Mike Beranek. "We’re grateful to Congresswoman Finkenauer for being a champion for Iowa students.”

A bipartisan group of state attorney generals from across the country—including Iowa Attorney General Tom Miller—have placed these predatory institutions under a greater spotlight, leading to widespread calls for accountability and relief for impacted students. 

“Hundreds of Iowans have been waiting months or even years to get help after attending institutions that have defrauded students,” said Iowa Attorney General Tom Miller. “The Iowa Attorney General’s Office has gotten more than $11 million in debt relief or other assistance for Iowans who took out institutional loans to attend ITT, Corinthian and other for-profit schools. Many of these students, however, are still waiting for forgiveness of their federal student loans. Only 17 percent of the Iowans who have applied for relief through borrower defense to repayment have received help. Legislation is needed because the U.S. Department of Education isn’t doing enough, and we’re pleased that Rep. Finkenauer has proposed a remedy.” 

In 2012, Former Senator Tom Harkin released a landmark investigation on the tactics that many for-profit institutions used to manipulate students into paying high prices for an education that failed to meet advertised standards and the subsequent financial hardship faced by those students. The investigation found that students were left ill-prepared for the jobs they were supposed to be trained for, saddled with near-insurmountable levels of student loan debt. It unearthed disturbing practices that the college recruiters used, like targeting returning veterans struggling with post-traumatic stress disorder and the use of a so-called “pain funnel” to identify vulnerabilities that could be used to pressure students into enrolling.