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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Young Invincibles’ Statement on Department of Education’s Move to Revoke Accreditation Power From ACICS


June 15, 2016

Contact: Sarah Schultz,, 202-734-6510

WASHINGTON — After the release of a recommendation from the Department of Education’s annual accreditation review to remove the accrediting powers of the Accrediting Council for Independent Colleges and Schools, Rory O’Sullivan, deputy director of Young Invincibles released the following statement, praising the move:

“Too many students are being taken advantage of by poor quality schools that cash in on their dreams of earning a college degree. We strongly support cutting off schools who routinely fail their students from accessing Federal Student Aid, ” said Rory O’Sullivan, deputy director of Young Invincibles. “Given the alarming number of state and federal investigations into ACICS-approved schools, we are heartened to see the Department taking a closer look at the outcomes institutions accredited by the body provide.



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Comments on Request for Information Regarding Student Loan Borrower Communications

Consumer Financial Protection Bureau Attention: Monica Jackson
Office of the Executive Secretary 1700 G Street NW
Washington, DC 20552

Re: CFPB-2016-0018-0001, Comments on Request for Information Regarding Student Loan Borrower Communications!documentDetail;D=CFPB-2016-0018-0001

Dear Ms. Jackson,

Young Invincibles (YI) thanks the Consumer Financial Protection Bureau (CFPB) for requesting comments on their proposed “Payback Playbook”, a simplified tool to help borrowers understand their student loan repayment options. YI is a non-profit advocacy organization working to advance economic opportunities for young adults ages 18 to 34 in the areas of health care, higher education and economic security.

Over the last several years, Young Invincibles has talked to young adults across the country about their first-hand experiences with loan servicing and has heard time and again from students who are confused or misinformed by their servicers. In 2015, we conducted a survey of over 1200 borrowers that yielded the following results:

  • 54% of borrowers felt that their servicer had made it more difficult to repay their student loans.
  • 37% of borrowers felt that they had not received timely or accurate responses from their servicer.
  • 39% of borrowers who contacted their servicer to change their repayment plan to lower their monthly payments did not reach a positive outcome.
  • 32% of borrowers reported that when their student loan servicer changed, they experienced problems repaying their loans as a result.
  • Almost half of the over 1,200 respondents took the time to write out descriptions of problems they have had with their servicers.

These survey results support the thousands of anecdotal stories YI has heard for years from borrowers about the problems encountered when dealing with servicers. Even more problematic is that the majority of survey respondents had completed college or graduate school and are more likely to have the means to repay their loans. This leads to two conclusions. First, the system is so ineffective and difficult to navigate it stymies borrowers who have the means to repay and may have more experience navigating complex systems. Second, borrowers without a degree who are in the most danger of delinquency and default too often cannot get the help they need to avoid negative outcomes.

We are hopeful that a streamlined tool like the Payback Playbook can be effective in reaching the huge population of borrowers that experience these difficulties. The proposed tool appears to present clear, yet contrasting, repayment options to the borrower. We’ve heard from young people that information that is unique to their situation and contains a limited number of distinct choices is preferable to general information with several choices. In light of that, YI recommends:

  • The Playbook is linked to on the borrower’s home page on their servicer’s website. We hope this would ensure that borrowers are always aware there is a tool to view some of their repayment options in clear language.
  • The Playbook is emailed to borrowers every month during their grace period until they select a repayment plan, as well as appearing unprompted every time the borrower logs on until they select a repayment plan. Preventing delinquency and default is best done before the borrower enters into either situation, and ensuring clear information for borrowers at the beginning of their repayment process should be helpful.
  • The Playbook appears unprompted at regular intervals when a borrower logs into their account, regardless of borrower status.
  • The Playbook is emailed to borrowers annually, timed to coincide when they will be required to re-certify if enrolled in an income-based plan.
  • The Playbook appears unprompted every time a delinquent or defaulted borrower logs into their account, until the delinquency or default is positively resolved. Preventing negative outcomes for borrowers is essential, and every opportunity should be used to get borrowers into plans that work for them.
  • The Playbook page for delinquent and defaulted borrowers offers the plan that will result in the lowest monthly payment.
  • The Playbook page for non-delinquent borrowers clearly states that there are more than the three plans visually represented available, and the information located on the bottom of the page on additional plans is made slightly larger. While simplified choices are a good gateway to the borrower understanding they can change their plan, until the system is further simplified, access to information on all plans should remain available.
  • The Playbook should also be mobile-friendly. Many young people are smartphone- dependent.

We are hopeful these recommendations will be responsive to the needs of borrowers.

Thank you for the opportunity to comment on the proposed Payback Playbook proposal. We hope that the Consumer Financial Protection Bureau finds our input valuable and we look forward to continuing to work together. For more information, please contact Reid Setzer, at or at 609-379-0123.


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New Brief Finds Major Racial Disparities in College Major Selection


September 16, 2015

New Brief Finds Major Racial Disparities in College Major Selection, Boosts Case for Providing Outcomes Data by Major

[WASHINGTON]–Today, Young Invincibles released a new brief called Major Malfunction, which looks at racial disparities in college major selection. The report finds African American and Latino students are overrepresented in the lowest paying majors, Latinos are underrepresented in almost all top paying majors, and African Americans are represented at half the rate they should be in important STEM majors.

This brief comes on the heels of the White House unveiling its new College Scorecard, providing students and families with information about institution cost, graduation rates, and average starting salaries. This is a step in the right direction, but students and families need additional information to fully be able to weigh the value of their investment, and that information is major-level data.

“Our research shows that not only are there vast disparities in educational attainment by race, but the inequities extend to fields of study, with students of color underrepresented in the most lucrative fields,” said report authors Tom Allison and Konrad Mugglestone. “For this reason, it is all the the more important to provide students with data about outcomes at both the institution- and major-levels so that they can better asses which schools and fields of study will best set them up for success upon graduation.”

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Students Fight to Keep Affordable College From Becoming Extinct

By Jessica Adair

My family’s mantra is as American as apple pie and baseball: work hard, get an education and you’ll succeed. It was clear, prescriptive and a fairly sound philosophy for those without great wealth or powerful connections. Like millions, I did what I was told.

That recipe for success, however, comes with a very expensive price tag. Average tuition at a public, four-year colleges has increased by 28 percent, or twice the rate of inflation, just since the 2007 to 2008 school year. To make matters worse, student aid can barely catch its breath trying to keep up with ballooning college costs. Pell Grants, once seen as the gateway to the American dream for aspiring graduates from low-income families, now cover a third of the cost of college.

It is time for our generation to mobilize state by state to change this.

Read more on The Huffington Post.

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How North Carolina Can Help Struggling Millennials, And Boost Its Economy

By Colin Seeberger

This week, North Carolina kicks off what is bound to be a raucous 2015 legislative session. With important debates looming around the state’s support for higher education and access to affordable health care for young North Carolinians, the state might as well call this session: the Millennial legislative session.

As economic recovery begins, the General Assembly must decide how to invest in the state’s future. It should start by looking at two systems it has neglected – higher education and health care – and how these decisions affect young adults and the state’s economy.

Recent cuts to higher education threaten to drive tuition prices higher. Since the Great Recession, North Carolina has cut higher education spending per student by 13%, helping drive tuition at its 4-year public universities up by 35% – or twice the rate of inflation.

It makes sense that during an economic downturn, North Carolina – like many states – cut corners. But today, as more people go back to work, it is not fair to ask North Carolina students to pay more in tuition while the state doles out corporate welfare.

Unfortunately, that is exactly what’s been happening. In fact, North Carolina faces a budget shortfall of nearly $200 million, largely due to a series of tax reforms.

Rather than reinvest in its young people, the state has prioritized additional tax cuts that threaten economic growth. The General Assembly and Governor must reinvest in higher education this year to change this – and fast. 

Yet combating college costs isn’t the only thing that North Carolina Millennials will keep an eye on this legislative session. There’s one other big economic challenge facing our generation. As the state’s most uninsured age group, young adults in North Carolina need expanded access to affordable health care coverage.

Unfortunately during the last legislative session, the General Assembly rejected the Affordable Care Act’s Medicaid expansion to accept billions in federal funding to provide free health coverage to the state’s poorest adults. North Carolina decided 553,000 of its lowest-income residents were too poor to be given access to an affordable coverage option. Up to 47% of these North Carolinians locked out of affordable health care are Millennials.


Ultimately, those who are suffering from the General Assembly’s refusal are North Carolina’s hardest workers — many work in restaurants or retail stores, while many more are in school working towards a degree. In a recent survey, 69% of young adults who did not complete college said that having insurance would have helped them “a lot” at earning a degree. Because earning a college degree can improve a person’s chance of landing a job to contribute to the economy, North Carolina needs to make it easier for its Millennials to get a degree, not harder.

Yet North Carolina is choosing to leave $51 billion on the table by refusing to expand Medicaid, while suffering from a significant revenue shortfall. Expanding coverage isn’t just a decision that would give North Carolina’s uninsured population greater financial and health security, it would also improve the state’s fiscal health.

It’s time for the North Carolina legislature to say that the interests of its young people are more important than partisan bickering and strident ideologies – and critical to economic stability.

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When It Comes to Higher Education, These States Are Blowing It

By Jessica Adair

In today’s economy, higher education is often key to quality employment. State legislatures have every reason to encourage residents to graduate with as little debt as possible, get a job and start spending money in the local economy.

Student_in_Class_(3618969705)The Great Recession forced most states to slash budgets across the board. As the economy recovers, states must invest vigorously in higher education.

Some states, however, have a disturbingly long way to go — and seem to be making it harder for students to afford college, rather than easier. We analyzed higher education and government data to create state report cards, identifying the best and worst actors. Here’s a snapshot of some states that particularly disappoint us (we gave all of these states “F’s”):

New Hampshire: This state is a recipe for disastrous student debt. Not only must students pay the highest average tuition cost in the country (nearly $15,000 a year!), the state offers no student aid whatsoever. Zero. New Hampshire also spends the least amount of money per student than any other state. It’s no wonder that the average student debt load in the state is about $32,700, which is higher than the national average.

Michigan: You would think that the home of the second-highest-paid college football coach in the country would also provide for its students. Unfortunately, that’s not the case. The state has cut its higher education spending by 27% since 2008. The result? Tuition is incredibly high, to the tune of an average yearly cost of $11,600.

Oregon: During the state budget slash-and-burn after the Recession, higher education took a severe hit in Oregon. In 2013, the state spent a shocking 85% less on higher education than it did four years ago. Higher education now accounts for less than 2% of the state budget. Tuition prices reflected the cuts, now 29% higher than before the Recession

Arizona: Students in the Grand Canyon State have had to endure a severe case of sticker shock. The average tuition cost for four-year colleges has increased over 80% since the Recession! Why? It could have something to do with the state cutting funding by 30% per full-time student.

For the sake of students and their families, states should seriously consider prioritizing higher education when developing next year’s budgets. To see how higher education funding fared in your state, find your report card here.

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Student Loan Repayment Rates Hold Ineffective Schools Accountable

Sarah Sertic enrolled in a for-profit college, the Art Institute of Washington, enticed by their flashy advertisements promising jobs in “the industry.” She later learned that the job prospects proved non-existent. Two years and $18,000 in federal student loan debt later, she couldn’t scrape together the $5,000 she needed to pay her remaining tuition bill or to bring herself to take on more debt. She was forced to drop out just one semester before graduation. Young Invincibles routinely hears of for-profit institutions failing to equip their students with the skills they need to land meaningful employment and repay their student debt. Fortunately, the Department of Education is developing regulations to hold the worst career education programs accountable for student outcomes. The current draft uses two metrics: graduate debt-to-earnings ratios, and default rates of former students. Programs that fail the metrics would no longer receive taxpayer funded financial aid.

While these metrics are important, they do not provide sufficient protection. Debt-to-earnings ratios only cover graduates, meaning programs with high dropout rates can evade the rule. Moreover, schools have learned to “game” default rates by ensuring students defer their loans long enough to avoid sanctions. The schools escape accountability while the students are left with unaffordable debt. To close these loopholes, the Department must add a third metric known as the repayment rate.

The basic idea is to ensure a minimum proportion of former students are actively repaying their loans.  Repayment rates penalize programs with high debt loads and few graduates. They are also much more difficult to game than default rate measures because schools cannot push students into deferment or forbearance to dodge responsibility. Together with strengthening the proposed debt-to-earnings ratio and default rate metrics, a repayment rate metric would set a reasonable minimum standard for school performance.

The Department actually had a type of repayment rate measure in a prior draft of the rule, but removed it citing data challenges. It has also expressed concern that the courts nullified a previous repayment rate measure because the Department failed to justify its proposal.  These are poor reasons to shy away from protecting students. The Department has reams of data at its disposal and all the courts require is some minimal reason for setting a repayment rate level. We believe there are several options, but discuss our preferred one here.

Young Invincibles proposes a repayment rate threshold set at 45%.* The idea behind what we propose is simple: graduating from college should improve one’s ability to pay back student loans. If a program cannot produce a greater proportion of students who are able to pay back their loans than the proportion of people with only a high school diploma who could potentially pay back loans, then the program is not producing sufficient outcomes for students or taxpayers.

We would base the standard for ability to repay loans on threshold already endorsed by Congress on multiple occasions. Namely, if someone earns more than 1.5 times the federal poverty level, she could be expected to repay something on her student debt.

Of the nearly 11 million of 25-34 year olds who graduated high school, we estimate that approximately 46.2% could potentially afford some level of student loan payments. We also estimate that over 70% of bachelor’s degree graduates ages 25-34 could afford to repay their student loans under the same formula. Taking into account some small limitations in census, the most appropriate metric for career programs is 45%. The Department also identified a similar threshold in an earlier draft of the rule, suggesting it was valid then and is still valid now.

If a for-profit institution is producing a majority of graduates who cannot pay their loan repayments with a degree, that institution does not deserve federal aid. Equipping Americans like Sarah with viable, marketable skills is more important than maintaining the status quo. The Department has all the data and reasons it needs to implement a strong standard. Now all it needs is the will.

You can read more about our proposals and the methodology behind them in our letter to the Department here.

* Note there are multiple possible definitions of repayment rate that the Department has used. We recommend they use the repayment rate weighted by original outstanding principal balance as included in the 2011 final rule.

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The US Is Using Its Youth as a Credit Card

Vice News 

By: Mary O’Hara

On Monday, the US Congressional Budget Office, in releasing its ten-year projections for the Department of Education, revealed that the government is projected to profit from student loan debts over the next ten years — to the tune of $127 billion.

According to experts, that student-debt-financed revenue stream is unlikely to be spent on the struggling higher education system — where tuitions are skyrocketing and graduates are increasingly defaulting on their loans.

Instead, all that profit from student loans is expected to be allocated for general government spending, so that Uncle Sam could use interest payments collected from students to pay off the government’s debts.

That’s right: the government is using America’s youth as a credit card.

Massachusetts Senator Elizabeth Warren, speaking this past Saturday at Suffolk University LawSchool’s research symposium on student loans, demanded that the government eliminate profit from the federal student loan program.

“The idea that we would ever allow our student loan program to generate extra cash for the government is obscene,” Warren told the crowd, “We should be investing in students, not turning them into a profit center to pay for subsidies to big agribusiness or to meet the payments on defense contracts.”

The numbers involved are staggering: 38 million borrowers currently owe $1.1 trillion in student loan debt, according to American Student Assistance, a nonprofit organization promoting financial competencies in college students and alumni. Its 2013 report, “Life Delayed: The Impact of Student Debt on the Daily Lives of Young Americans,” estimated that the US government was set to pull in a profit of $34 billion in 2014 alone.

Paul Combe, the president of American Student Assistance, likened the growing burden of student loan debt to secondhand smoke: like cigarettes, loan debt used to be seen as a matter of individual risk — until it became clear that everyone’s economic health is affected by everyone else’s.

“It’s a problem for us all,” Combe told VICE News. “The question is, what is the impact on our economy when a third of the credit of all these students who graduate and are normally the consumers — who would otherwise buy homes and buy cars — is already eaten up by student loans?”

Combe was careful to point out that the congressional budget projection is a generous estimate, not a hard number: “I’m not saying there isn’t profit here, but [the projection assumes] that everyone’s going to pay back loans in ten years. It doesn’t factor in the cost to the government of holding those loans over years, and it doesn’t factor in the cost of collections.”

Regardless of the precise numbers, it’s pretty clear that the government is profiting off student loans — and that graduates are having a hard time paying them back.

A 2011 Institute for Higher Education Policy study on student loan delinquency showed that 41 percent of student borrowers who began repaying loan in 2005 couldn’t make loan payments at all — and wound up either becoming delinquent on their loans or defaulting entirely.

Granted, those student loan borrowers entered repayment when unemployment was peaking l — but almost half of them found it impossible to make any payments at all during their first few years out of school.

The situation was pithily summed up by Nobel prize winner Joseph Stiglitz, one of the nation’s most famous living economists, in the title of a 2013 New York Times opinion piece: “Student Debt and the Crushing of the American Dream.”

Jen Mishory, executive director of the national youth policy organization Young Invincibles, elaborated on this state of affairs in a statement, reacting to the budget report, emailed to VICE News.

“The government is profiting off students at a time when tuition and debt levels are skyrocketing,” wrote Mishory, “Borrowers are being forced to choose between paying student loans and making major life purchases like buying a car or a home. Enough is enough. Young people want to contribute to the economy, but policies like this one make it more difficult to afford college and earn a decent living.”

The American Student Assistance report revealed in survey results the stunning effects of student loan debt on graduates: 75 percent of those polled said student loan debt affected their ability to buy a home, 29 percent said it caused them to delay getting married, and 27 percent said it was difficult for them to buy daily necessities because of their student loans.

“The federal government should be working to protect borrowers, but instead it is making things worse for these borrowers by embedding huge profits in its student loan interest rates. A January GAO report estimates that the federal government will bring in $66 billion in profit on just one slice of the federal loans — those made between 2007 and 2012,” Warren said at the symposium.

The Senator called on the government to reinstate bankruptcy protections on student loans and allow loans to be refinanced — as is common practice with home mortgages — when interest rates drop so that borrowing students would not be locked into a needlessly high fixed interest rate for life — and wind up paying thousands of dollars in extraneous costs.

Combe told VICE News that Paul Ryan’s recently passed House budget for 2015 changed the way free college grants are funded: “The Pell Grants have been moved into a discretionary area, meaning their funding will be up in the air every year.”

“Right now, 65 percent of all student funding is in the form of loans,” said Combes. Now that the House has voted to freeze grants for the next ten years and leave their funding up for grabs, it would appear the government is forcing college students to borrow — which, in turn, increases the government’s take.

So does that mean the government is moving toward a higher education system funded entirely by loans — and loan debt that pays other government bills?

Combes said that could be the case: “Because of budgets and this sense of government funding of social programs being perceived as a negative, we’ve been slowly moving into that direction without looking at the consequences of it.”

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Georgia receives low grade for investment in higher education

The Red & Black 

By: Daniel Funke

Efforts to expand access to colleges and universities in Georgia may not be benefiting students and their families as much as those in other states, according to a recent report.

The Student Impact Project, a rating system conducted by the public policy organization Young Invincibles, gave Georgia a grade of C+ for its higher education policies, and included factors such as tuition, state aid and burden on families.

According to the report, tuition rates in Georgia have risen 79 percent in the past five years, resulting in an average debt load of $22,443. In addition, the state legislature has cut support for higher education by 30 percent since 2007, leading to a 96 percent increase in the burden placed on families.

“Higher education budget cuts handicap not only students and their families, but the larger American economy,” said Aaron Smith, executive director of YI, in a press release. “Large tuition increases and declining financial aid have driven students into greater debt at a time they can least afford it.”

Colin Seeberger, the communications coordinator for YI, said the study focused on how state educational policies affected students and their families.

“Twenty-five years ago, states picked up about 80 percent of the tab of higher education. We’ve seen a shift in the burden away from the states and toward students,” he said. “We sort of broke down how the higher ed budget in each state affects students. We wanted to amplify the student perspective, so we looked at what would affect them.”

Ryan Nesbit, the vice president for finance and administration at the University of Georgia, said the university is constantly seeking ways it can provide financial aid to help students and their families.

“A very high priority of our administration is keeping education affordable while at the same time maintaining the quality of the academic experience,” he said.

Nesbit said the administration routinely conducts operational efficiency evaluations in order to make sure UGA is using its funds as efficiently as possible so that additional steps may be taken to contribute to the educational process.

The Red & Black attempted to contact the UGA Office of Student Financial Aid, but it declined to comment.

Although Georgia received low grades for changes in tuition rates and the burden policies place on families, Seeberger said state aid initiatives, such as the HOPE Scholarship, are improving student access to higher education.

“A C+ isn’t great, but at the same time there are a lot of states that are in a lot worse shape than that,” he said. “In terms of improvement, there’s got to be a way that we can reverse the trend in having the costs shift to being on families. We have to find a way that the states can pick up a bigger part of the tab.”

Emma Wakeman, a freshman women’s studies major from Atlanta, said HOPE is an indicator of Georgia’s commitment to higher education.

“We got a C+, but also we have the HOPE Scholarship, which I think is a huge difference between [UGA] and other state universities,” she said.

Seeberger said YI conducted the project by collecting policy data from each state and then averaging that with other states.

“We averaged all [the factors], we took the data, we standardized it based on some sort of plausible baseline, whether it was the national average or the rate of inflation, we scored every state, gave them a letter grade for each subject and the final grade is an average of all those,” he said.

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