Warren Asks For-Profit College Chain to Stop Collecting Student Loan Debt
U.S. Senator Elizabeth Warren, along with 11 other senators and representatives, has called on a for-profit college chain to stop collecting outstanding student loan debt from its former students.
The lawmakers wrote a joint letter to Stu Reed, President and CEO of now-defunct Education Corporation of America (ECA), urging the organization to cease its attempts to recover various accounts that are pending with the students.
In December, the financial constraints and withdrawal of accreditation by the Accrediting Council for Independent Colleges and Schools forced the company to close 70 campuses nationwide that mostly offer vocational training and associates degrees affecting at least 20,000 students who were left with incomplete degrees, according to The New York Times report.
“ECA’s collapse left former students who took out thousands of dollars in federal student loans with partially completed degrees or credentials with little to no value,” the lawmakers wrote in their letter.
“Given the hardships many of these former students already face with regard to federal student aid, collecting on former students’ accounts receivable adds insult to injury.”
John F. Kennedy from James Bates Brannan Groover was appointed as a receiver to manage the company’s debts and had agreed not to collect outstanding dues from students who were enrolled in its campuses at the time of shutdown but made no commitment to do the same for the previous students.
Last month, the receiver filed a motion in a federal court to collect the “outstanding student loan debt and accounts receivable held by former students.”
“Any attempt by the Receiver to collect outstanding accounts receivable or any other financial obligations from former students after nearly a year would be deeply concerning,” they wrote.
“The Receiver’s apparent plan to sell these accounts receivable to third-party debt collectors to satisfy ECA’s creditors is an unconscionable assault on the financial lives of former students, who have already suffered enough,” they added.
In July, Warren introduced a bicameral Student Loan Debt Relief Act to forgive loans of up to $50,000 for those whose household gross income is less than $100,000 by using already available data on household gross income and pending student loan debt.