Ayelet Sheffey

FSA Director Rich Cordray. REUTERS / Larry Downing

  • The federal student aid office has just observed violations that cost taxpayers $ 6 million from 2015 to 2018.

  • The now defunct RWM fiber optic has suffered 16 breaches, while 2,100 Harrison College alumni are eligible for debt relief.

  • The Education Department is reforming the student loan system amid calls to write off all debts.

  • See more stories on the Insider business page.


In the latest move by the Education Department to protect student loan borrowers, it found on Tuesday that violations of student aid requirements and school closures from 2015 to 2018 cost taxpayers more than $ 6 million in liabilities.

The Federal Student Aid Office (FSA) announced in a press release that RWM Fiber Optics – a now defunct for-profit school – was mismanaging student loans and related aid, leaving borrowers with unfair debts. He also noted that the 2,100 students who attended Harrison College’s 11 campuses are eligible for a loan forgiveness after it closed in 2018. This follows the Department of Education notice. announcement Last week, he will form a negotiated rule-making committee to address a range of issues affecting student loan borrowers, such as fraudulent school debt forgiveness.

“All institutions are supposed to serve the best interests of their students, not themselves,” FSA chief operating officer Richard Cordray said in a statement. “Schools that behave badly or suddenly close their doors, leaving students in the cold, will be held accountable, and we expect other schools to pay attention to the actions we take today.”

Specifically, the FSA found that prior to RWM’s closure in 2018, the school falsified information to make students eligible for aid they were not entitled to, fictitious degrees that students were not entitled to. not obtained and had submitted student aid information without the knowledge of the student without verifying if the information was correct.

RWM also used the Federal Work Study program to pay students to clean bathrooms and pick up trash, which did not help students pursue careers as the program required. The FSA found that the school had committed 16 “gross” violations worth more than $ 2.4 million.

The FSA also found that students who attended Harrison College, which closed in 2018, are eligible for cancellation of their student loans given that they were unable to complete their programs due to the school closure. Harrison owes nearly $ 4 million to the taxpayers who paid to cancel the loans of these borrowers.

Insider previously reported that Cordray’s role in helping students could mean a possible cure for the student debt crisis given her alliance with Massachusetts Senator Elizabeth Warren, a prominent debt cancellation advocate. student.

Last month he repealed a Trump-era policy that limited states’ ability to oversee student loan services, and separately the Department of Education began to write off student debt that was defrauded by for-profit schools.

But as the ministry is implementing changes to the student loan system as a whole, reforming loan cancellation programs and working to provide eligible borrowers with student debt relief. , the process could take years, and advocates want President Joe Biden to act. quickly on a large-scale student debt relief for every borrower.


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