Former students of defunct Manchester college could see student loans cancelled
Aug. 9—Former students of the defunct Mount Washington College in Manchester could have their federal student loans canceled after a federal judge last week approved a settlement with the U.S. Department of Education that could wipe out debt for hundreds of thousands of borrowers who attended for-profit colleges.
Mount Washington College, once located in an office park on Manchester's Sundial Avenue with satellite locations in Salem, Concord, Portsmouth and Nashua, had more than 1,800 students at its peak. It is one of 153 colleges listed in the settlement proposal in a federal court case brought by student borrowers who attended for-profit schools that they say misled them about the value of the education.
People who took out federal student loans to attend one of the listed colleges and who filed a "borrower defense application" with the U.S. Department of Education before June 22, will automatically have their loans forgiven if the settlement is approved. A final hearing on the settlement is set for early November.
If a court grants final approval, as many as 200,000 borrowers nationwide could get their student debts forgiven automatically.
Other colleges listed in the proposed settlement include national chains Globe University and Capella University, and the Massachusetts-based Salter College and New England College of Art.
Mount Washington College, formerly known as Hesser College, closed in 2016 after sharp declines in enrollment in the early 2010s. The college had been owned by Kaplan Higher Education Group, which also owned a chain of Massachusetts-based vocational colleges.
In 2015, Kaplan paid a $1.3 million settlement to resolve allegations that they inflated job placement numbers, employed unqualified instructors and used unfair recruiting tactics to persuade prospective students to enroll in their programs. The company did not admit any wrongdoing.
Kaplan later was acquired by Purdue University Global — another of the for-profit colleges whose students could see their loans wiped out with the new settlement.
High cost, iffy result
The for-profit college industry has been under scrutiny for more than a decade.
A U.S. Senate committee investigation in 2012 found that for-profit colleges typically charged more than community colleges and state universities and accounted for a disproportionate share of student loans. The investigation determined that about 86% the industry's revenue came from federal funding, including loans and veterans' benefits.
Students who attended for-profit colleges raised concerns about aggressive recruitment, inflated job-placement numbers, unqualified instructors — and the student debt they had trouble repaying without meaningful employment prospects. The Obama administration imposed more regulations on for-profit colleges and began forgiving the federal student loans for students who attended troubled schools.
In the final six months of the Obama administration, more than 28,000 students who took out federal student loans to attend for-profit colleges had their loans forgiven by the Department of Education.
But the process ground to a halt during the Trump administration, with attorneys who represent student borrowers alleging no borrower-defense applications were approved for two years.
Attorneys with the Project on Predatory Student Lending filed a class-action lawsuit in 2019 against the Department of Education, asking the department to restart loan-forgiveness reviews.
In June, a proposed settlement in the case was announced.
The Department of Education agreed to automatic loan forgiveness for about 200,000 students who filed borrower defense applications before June 22 and who attended one of 153 schools in a list.
A department employee's letter filed with court documents explains the listed schools were chosen because of "strong indicia regarding substantial misconduct" and because they had large numbers of borrower defense applications.
A judge's initial approval of the settlement last week brought loan forgiveness one step closer for borrowers.
The U.S. Department of Education announced in June that it also would discharge the federal student loans for people who borrowed to attend Corinthian Colleges. In 2021, it forgave loans for 1.5 million borrowers who attended ITT Technical Institute.
