This article is about for profit school scams, slimy loans and students committing loan fraud by using mom’s identity to pay for multiple cosmetic surgeries. I know, it totally sounds like a bad script for an American trashy cable TV show. But this is a true story based on facts, rather than the imagination of a Hollywood script writer.
First we had the mortgage and real estate crisis of 2007. A crisis partly fueled by deceptive mortgage lending, greedy borrowers and massive fraud from Wall Street to Main Street. Fast forward to today, now we are in a full scale student loan crisis that is just beginning to rear its ugly head with the highest default rates in nearly two decades.
There are many reasons why this happening. For example, recent college graduates are having a tough time finding a job time in this rough economy. Simply put, a college degree is by no means a one way ticket to easy job street. With no job prospects for many grads, they have no way to pay back these loans. It is estimated the average amount of a defaulted loan is approximately $14,000. But the facts are many of these loans are in the tens of thousands of dollars, and strapped for cash students have been defaulting big time on their loans.
Now we also have to consider that many young student were duped, defrauded and just taken advantage of by unscrupulous for profit schools, and loan advisors. Schools that misled students with promises of rewarding careers, and then leaving them with very little real life job training and thousands of dollars in student debt.
The complaint , filed today in Suffolk Superior Court, alleges that since 2009, Corinthian Colleges, Inc. and Corinthian Schools, Inc., which operate Everest Institute, have misled Massachusetts students in order to increase profits for shareholders at the expense of students and taxpayers.
“We allege that this for-profit school aggressively recruited and misled students by falsely promising high quality, successful training programs, and instead left them with exorbitant student loan debt and without proper training or a well-paying career,” AG Coakley said. “Our office will continue to investigate the for-profit school industry as we continue to see students and taxpayers suffer the consequences of high default rates, inadequate training, and mounting debt.”
There have also recently been a large amount of arrests and prison sentences handed out for student loan fraud. In February, “Two Northern California residents have been sentenced to federal prison in separate student loan fraud cases,” the Associated Press reported and in November of 2013, “A Pennsylvania woman was sent to the slammer for 15 months after she fraudulently obtained $600000 in student loans to pay for cosmetic surgeries. prosecutors had said Meredith Shuster, 36, of Cranberry, Pa., a suburb north of Pittsburgh, used her parents’ identities to solicit the loans. She then used about half the money on a series of cosmetic surgeries to alter her appearance.”