Automatic Group Student Loan Relief Offered to Defrauded Borrowers

January 13, 2017
CONTACT: Sarah Schultz,, 202-734-6510

[Washington, D.C.] - The Department of Education announced today that federal student loan borrowers at the defunct American Career Institute in Massachusetts are eligible for automatic group discharge of their federal student loans under the recently finalized borrower defense rule. Investigations by the Department of Education and the Massachusetts Attorney General’s office, combined with admissions of wrongdoing by ACI, demonstrated that the school misled and deceived students, employed unauthorized instructors, and exaggerated its job placement rates.

“The decision to grant automatic group discharge lifts a huge weight off the shoulders of students who were deceived,” said Reid Setzer, Deputy Director of Policy and Legislative Affairs for Young Invincibles. “Discharging loans used to attend fraudulent institutions is exactly what the Department should do in cases like these. The Department has made sure that these defrauded borrowers can get back on track, without having to go through complex and confusing processes that can prevent them from obtaining relief. We hope the Department will continue to protect students from predatory actors and help restore the financial security of students whenever fraud has been found, so they can continue to pursue their educations.”

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Making the Most of Millennial Talent

Navigating today’s post-recession job market is daunting for many new graduates. Employers expect entry level hires to come with work experience, which often means taking an unpaid internship (or two, or three) for those lucky enough to be able to afford it. For the rest of our generation, it can be a real struggle moving from graduation into the workforce. Young workers without a degree beyond high school face even tougher prospects. It comes as no surprise that jobs and education are the top policy priorities among young voters.

The Lumina Foundation is leading an effort called #TalentTuesday designed to get people talking about the need for more Americans with education beyond high school. Our generation understands this challenge on a very personal level. We know the path to economic security runs through the doors of higher education, but face many barriers along the way. Here’s our take on what policymakers and employers can do to alleviate these challenges and ensure our generation reaches its full potential.

For the vast majority of our generation, the conversation about getting a degree after high school starts with affordability. As college costs have skyrocketed, students are graduating with ever high levels of debt. Currently the national the total now stands at $1.3 trillion. Tackling this problem requires making college more affordable for current students and alleviating the debt burden for borrowers. Our report Higher Education Promise for the 21st Century lays out our ideas on both fronts. The federal government should focus on increasing investment in Pell grants and encourage states to reverse major budget cuts to higher education. Simplifying the application process as well as the number of income-based repayment plans would ease repayment for millions.

The conversation, however, must go beyond debt and affordability. As we note above, our higher education system needs stronger connection to the 21st century workforce to meet the needs of students and employers. One option is reforming Federal Work Study, which currently provides work experience to students while assisting them with college costs. Congress should change the formula to reach more low-income and community college students while encouraging schools to do more to ensure that work-study positions serve as stepping stones to careers.

Solutions must also go beyond two- and four-year degrees. The best evidence suggests that quality apprenticeships offer young people an opportunity to learn marketable skills and get paid to do it. They also have the added benefit of zero student debt. Promising policy proposals moving through Congress include the LEAP Act, which offers tax credit incentives to employers who host apprenticeships for Millennials, and the PACE Act, which increases grant funding to higher education institutions that offer apprenticeships.

Employers have a role to play as well. To attract Millennial workers, employers should keep a couple things in mind. First, benefits that help workers repaying student loans will appeal to millions of recent graduates soon to face their first monthly loan payment. Second, our generation is motivated by more than simply financial rewards. More than half of young workers report that having a job where they could make an impact was important to their happiness. Business need to show how Millennial workers can make a difference in the world.

More than one out of three American workers are now Millennials. Millions more will join this month as they graduate from universities across the country. We’re a diverse generation of creators, leaders, and entrepreneurs whose influence is growing in statehouses and business throughout the country. We look forward to being part of the #TalentTuesday dialogue, and to working with policymakers, higher education, and business leaders to ensure our generation is ready for the 21st century workforce.

Rory O’Sullivan is the Deputy Director at Young Invincibles where he directs the organization’s policy and advocacy strategy. He is an expert in a variety of issues related to young adults including federal financial aid, skills acquisition, youth employment, health insurance coverage, and consumer information.

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