Richard Fossey

A college education can set you up for a lifetime. Unfortunately, sometimes, the weight of student loan debt can ruin lives.

The most tragic cases are when students get both a worthless education and a mountain of debt. Too many Louisianans, like others across the nation, have been defrauded by for-profit schools. Ashford University, an online school that has partnerships with several Louisiana community colleges, deceived students into taking loans that cost more than advertised. Other schools have made false claims of job placement rates or offered worthless programs with credits that don’t transfer and don’t qualify students for the licenses they need. Veterans have been targeted by schools eyeing their GI benefits.

In some cases, state and federal authorities eventually provided some relief. In 2015, the Consumer Financial Protection Bureau obtained a 40 percent reduction in the private loans owed for tuition at Corinthian Colleges, which lied about job prospects and made private loans students couldn’t afford to repay. Close to 2000 Louisianans defrauded by Corinthian may also be eligible for federal loan forgiveness. Yet the U.S. Department of Education has dragged its heels since Education Secretary Betsy DeVos took over; not a single loan relief application has been approved this year, and Education is re-examining the rule that allows students to petition for relief.

Defrauded students should be able to take matters into their own hands. They should not have to beg, plead and wait for the government to do something.

In fact, students have been trying to bring class actions against Corthinian over its deceptive conduct since at least 2006 and against Ashford since at least 2011. Had those lawsuits been able to proceed, fewer students might have had their dream of higher education turned into a nightmare.

But Corinthian and Ashford, like other for-profit schools, have used fine print forced arbitration clauses in their contracts to convince courts to throw students out of court and deny them the ability to band together to expose widespread fraud. Instead, students are forced to bring their claims one by one before a private arbitrator, agreed to by the school, in a secretive process with virtually no appeal. Even if a student wins, the arbitrator has no power to force the school to address harm to thousands of other students in the same situation.

Forced arbitration clauses have also been used as a shield by banks, student loan servicer Navient (formerly Sallie Mae), and debt collectors pursing students overwhelmed with debt. Students have been kicked out of court when trying to challenge loans for fraudulent schools or confront illegal and abusive debt collection tactics, including repeated robocalls to cellphones and even calls to a student’s boyfriend’s grandmother.

Fortunately, some help is on the horizon — if Congress and DeVos do not block it. Last year, the Education Department enacted a rule that prohibits schools that take federal aid from using forced arbitration to block students from pursuing fraud claims in court. But DeVos has delayed the rule and is considering reversing it.

The CFPB also just finalized a new rule that will restore the ability of students, service members and other consumers to band together in court when banks, student lenders and other financial companies violate the law. The rule has widespread support, including from The Military Coalition, 310 consumer and community groups, and over 250 law professors and academics.

The CFPB rule will not just help students. It would have prevented Wells Fargo, which created up to 3.5 million fake accounts (including 862 or more in Louisiana), from using forced arbitration clauses to kick people out of court, allowing the fraud to continue.

But Wall Street lobbyists are pushing Congress to block the CFPB rule; the U.S. House of Representatives voted to do so in July, and it is now up to the Senate, which may vote in September.

Louisiana’s students — and all of us — deserve the right to defend ourselves and to exercise our constitutional right to access the courts if we need them. The federal government should not take that right away.

Richard Fossey is Paul Burdin Endowed Professor of Education at University of Louisiana at Lafayette.