Connecticut Senators Want Loans Forgiven For Students Of Fraudulent Colleges

Blumenthal, Murphy: Make it easier for students of fraudulent colleges to get rid of student loan debt

By:  Russell Blair
Hartford Courant

HARTFORD — Connecticut's two U.S. senators want to make it easier for students of for-profit colleges that close amid fraud allegations to get rid of outstanding student loans.

Marinello Schools of Beauty abruptly closed its seven locations in Connecticut last month after the federal Department of Education said the school was mishandling federal financial aid. About 500 students attended the branches.

"We're here because of the heart-wrenching, gut-wrenching stories of Marinello students who show up to their classes … and the doors are barred," Sen. Richard Blumenthal said Monday. "And they have these huge debts. How are they going to pay them off?"

Sen. Chris Murphy has introduced legislation — the "Students Before Profits Act" – that would increase civil penalties for for-profit schools charged with fraud and use the money to help forgive student loans.

"Right now students have to fight, fight, fight in order to get their loans discharged if they went to a fraudulent university," Murphy said. "We want the presumption to be that if you went to a school that has been guilty of defrauding students, then you are discharged from paying back those student loans."

Murphy said 12 percent of students attend for-profit colleges but account for 50 percent of all student loan defaults.

Blumenthal said the U.S. Department of Education on Friday had announced it was discharging loan debt for students of two for-profit colleges. In both those cases, the students did not have to prove individual harm but rather were able to just sign a form. That's the kind of process Blumenthal and Murphy want to see for students of Marinello and all other for-profit colleges.

The state Office of Higher Education has been working with students from Marinello to help them process tuition reimbursements and transfer to other schools if they are interested.

"I've seen firsthand those students and I can tell you it's heartbreaking the struggles that they face to get where they are and then to have the face the kind of bureaucracy and uncertainties about their loans … it's really troubling," said Noah Dion, of the state Office of Higher Education.

In a letter to students, Rashed Elyas, chairman and CEO of Marinello, said the company had "no other option except to close our schools" based on the Department of Education's "unprecedented and unfounded actions" of pulling federal student financial aid from the schools.