Lawsuit Over Loan Scandals Poses New Era For Private Loan Borrowers
Careers Education Corp (CEOC) lawsuits are among the largest instances currently filed against for-profit schools. While sometimes bringing justice to struggling students, not everyone can obtain these rewards. The agreement covers unpaid loans owed directly by the corporation to its borrowers. For years, CEOC has been collecting large default judgments from students. Now, the corporation plans to establish a new program that will allow debtors to seek an out-of-court agreement with the corporation.
There are many hidden costs associated with the lawsuits. One of the most disturbing questions is whether or not the federal government is keeping up with its promise to pay for the costs of the lawsuit. The true costs of the lawsuit vary greatly, from thousands of dollars to millions of dollars. If the U.S. taxpayers are footing the bill for the damages in this case, the bill could be very high. While no one is talking about the costs of this lawsuit, this is another troubling situation where a lawsuit is filing, but no one is footing the bill.
Many people do not understand why the career education Corp. sued CEOC for its illegal activity. The fact is, for-profit schools were reporting fake employment statistics to boost their job replacement rates. As previously stated, the U.S. Department of Education and the American Council on Teaching in Higher Education (ACTE) were aware of these inflated figures. It is now obvious that they were indeed illegally defying the regulations.
If the Career Education Corp. wins this suit, the ruling will be very bad news for both federal loan borrowers and for-profit schools. The judge will rule that the Corps had no legitimate reason to raise its job replacement rates during the time it was investigating CEOC. It will also be extremely unfortunate news for those who have already applied for government student loans. When the government discovers that a school has intentionally violated regulations, it will cancel the loans. With the huge number of borrowers already impacted, this could have a huge impact on the overall economy.
The lawsuit may not only hurt the for-profit schools, but it will also hit the U.S. economy hard. With so many students receiving federal loans, the loss of even one college could seriously impact the economy. For-profit schools have relied upon government funding to continue operating, and if they lose access to that money, then the schools are in danger of closing. Meanwhile, the other private loan borrowers will suffer as well. If the United States government takes the position that these illegal activities by the Career Education Corp., or any other entity within the Department of Education, is a valid reason for not granting new student loans, then the economy and job markets will suffer greatly.