Student Defense statement on Inspector General investigation into ED’s failure to collect debts from closed and predatory institutions
FOR IMMEDIATE RELEASE
December 13, 2023
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press@defendstudents.org | 202-734-7495
Student Defense statement on Inspector General investigation into ED’s failure to collect debts from closed and predatory institutions
Last week, the Department of Education’s Office of the Inspector General announced that one of its primary 2024 initiatives will be to evaluate the Department’s processes for assessing and recouping debt owed by closed colleges. The OIG announcement comes on the heels of numerous reports and advocacy by Student Defense shining light on the extent to which the Department has allowed closed and predatory institutions to walk away from their obligations to taxpayers. In response, Student Defense Vice President and Chief Counsel Dan Zibel released the following statement:
“We applaud the Office of the Inspector General’s commitment to shed light on money that shuttered schools owe the federal government. At a time when so many student loan borrowers are struggling, it is absurd that the people and entities who profited off our student loan system are allowed to walk away from nearly $1.5 billion owed to taxpayers.
“When the Department lets schools off the hook for bad behavior, it sends a powerful message that future misdeeds won’t be punished. We urge the agency to swiftly develop and implement a comprehensive plan focused on identifying and recouping as many of these outstanding funds as possible.”
Background Information
In June 2021, Student Defense published The Missing Billion, a report documenting how the U.S. Department of Education has allowed institutions of higher education to walk away from more than $1 billion in debts owed to taxpayers. The report scrutinized the Department’s practice of opposing individual borrowers in bankruptcy proceedings while allowing school executives off the hook for these outstanding debts. In August 2022, the organization published an updated report that found the Department of Education had made no progress towards collecting on these outstanding liabilities.
On December 8, 2023, in response to a request submitted under the Freedom of Information Act, the Department released new data establishing that more than $1.4 billion is now owed to the Department from institutions of higher education as of September 30, 2023.