Wis. AG joins 29-state coalition urging student loan discharge from closed schools

By Shereen Siewert

Wisconsin Attorney General Josh Kaul is one of 29 state attorneys general requesting that U.S. Dept. of Education Sec. Betsy DeVos allow loan discharges for students enrolled in schools operated by now-defunct Dream Center Education Holdings, LLC.

A letter sent by the bipartisan coalition details “extraordinary misconduct and mismanagement…which prevented students from obtaining degrees, and unfairly left them to repay federal student-loan debt from their time attending the failed schools,” according to a Wisconsin Dept. of Justice news release issued Thursday.

The letter details ways in which DCEH violated federal and state law and grossly mismanaged the schools, which led to the schools’ rapid closures — less than 18 months after acquiring the entities. The organization failed to inform students when two schools lost their accreditation during which time students registered for additional terms and took on debt for credits that could not be used, Kaul said. In addition, according to the DOJ, the organization failed to distribute more than $16 million federal loan credit balance refunds to students.

More than 121 Wisconsin borrowers who attended the schools, which included Argosy University, the Art Institutes, and South University, and could benefit if Sec. DeVos extends the current closed school discharge time frame.

Under closed school discharge, former students may be eligible for a 100 percent discharge of their federal student loans if they were unable to complete their program because their school closed. Closed school discharge is only allowed for students who were enrolled at the time the school closed; were on an approved leave of absence when the school closed; or withdrew within 120 days of the school’s closure, unless the Secretary approves a longer period.

In Wisconsin, more than 121 Wisconsin borrowers could benefit if Secretary DeVos were to extend the closed school discharge time frame, Kaul said.

“People who had the misfortune of attending a school that was mismanaged shouldn’t be saddled with debt for their unfinished degree,” Kaul said.

The Attorneys General wrote in the letter that a wide variety of regulators have found that Dream Center violated numerous federal and state laws, was non compliant with accreditors and grossly mismanaged its schools, leading to the schools’ recent closures.

“These closures prevented students from completing their programs of study, leaving borrowers with substantial student loan debt and nothing to show for it,” the letter reads.

In addition to Wisconsin, attorneys general in Oregon, Minnesota, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, South Dakota, Tennessee, Vermont, Virginia and Washington signed the letter.