When Argosy University abruptly closed in March, its students in Atlanta and across the country were left without their degrees, and many of them were saddled with thousands of dollars in student loan debt.
Now, students and lawmakers, including a Georgia congresswoman, are pushing plans to provide more safeguards for students when a school folds.
U.S. Rep. Lucy McBath, a Democrat from Cobb County, introduced a resolution two weeks ago to make permanent the “borrower defense” rule that eliminates student loan debt repayment if the school is found to have violated state laws or misled the student.
“Borrower’s defense is especially important to me after the closing of Argosy University’s campus in my district this past March,” McBath said on the House floor. “Students should focus on getting the quality education they were promised — not worrying about being saddled with large debts from schools that could not and did not deliver on that educational promise.”
McBath’s legislation was sent to the House Committee on Education and Labor.
The congresswoman’s proposal comes as presidential candidates, education leaders and organizations present ideas to reduce the more than $1.5 trillion in student loan debt, which U.S. Education Secretary Betsy DeVos has called a “crisis.” It also comes amid increased criticism that federal education officials have been too lenient with for-profit college operators, particularly that the government ignored complaints that the schools used false and misleading information, including inaccurate job placement rates, to recruit students.
Two organizations filed a class-action lawsuit against the U.S. Department of Education late last month claiming the department has not acted on approximately 160,000 borrower defense claims from students who attended for-profit colleges, including some that have closed.
Education Department officials did not respond to a request for comment.
“Its decision to keep over 160,000 students in limbo — some for over four years — has damaged students’ credit and limited their access to federal student aid. It has caused significant emotional distress, associated physical harm, and a loss of wealth and opportunity that students will never recover,” the complaint says.
Yan Cao, who focuses on higher education policy at the Century Foundation, said it’s important for Congress to pass such legislation: “When the Department of Education allows taxpayer-supported schools to get away with lying to students, it needs to clean up its mess, and that starts with ensuring that students are protected.”
The misfortunes of for-profit colleges has been a constant topic in higher education in recent years. About two-thirds of Georgia colleges that have closed in the past three years are for-profits, federal records show. Many for-profit schools rely more on tuition and spend a higher percentage of their money advertising, typically to low-income households.
Argosy, which offered master’s and doctoral degrees in fields such as clinical psychology, business and law, was one of the largest to shut down. Argosy had 16 campuses in 11 states and online courses. About 1,500 students took courses at its Georgia campus, located near Ga. 400 and I-285.
Most of its students, working professionals hoping to earn another degree, borrowed money to attend Argosy. The yearly tuition was about $20,000, according to Argosy’s website. The university changed ownership late last year as its finances were in free fall, but was still unsuccessful in turning things around.
Argosy students scrambled to continue and complete their education after the school closed. Now, many of them are lobbying lawmakers to find ways to help other students.
Jazmyn Hobdy, who moved from Texas to attend Argosy, emailed McBath’s office after the school folded, because she didn’t receive her stipend of about $3,000 for her education costs. Hobdy’s loan was eventually forgiven, she said. Hobdy said Argosy’s ownership was guilty of “horrible” communication and wonders if some money was illegally managed. The federal government suspended Argosy from receiving federal aid due to its financial mismanagement.
Like several students interviewed, Hobdy, 25, who lives in Sandy Springs, contacted lawmakers because she was “concerned not only for myself, but for other students.”
Jessica Salgado, 35, a former Argosy student who lives in Clayton County, said she contacted federal lawmakers about the school. She hopes legislation will crack down on what she describes as fraudulent business practices by Argosy and other schools to enroll students when administrators know the schools are in financial trouble. Salgado said she knows several former students who never received stipends that were supposed to help pay tuition.
Salgado continued her work toward a master’s degree in clinical mental health counseling at the University of West Georgia. She fears some Argosy students ended their educational pursuits after the school closed.
“Those people who walked away from this could have been some of the greatest game changers,” Salgado said Wednesday as she finished a final paper for a class.
Salgado showed The Atlanta Journal-Constitution a document from Argosy that said she’s owed a stipend of nearly $7,000 after the school added classes to her records she never took. Salgado doubts she’ll receive the money. She believes she’ll eventually owe money she borrowed for her Argosy education.
“It’s way more than we got in return,” Salgado said, referencing the school’s closure.
Former students such as Kimberly Milbrandt said little information was shared with students during the ownership change. She and others met with a representative from U.S. Sen. Johnny Isakson’s office last week to propose ideas like requiring schools to be more transparent with students during an ownership change and that the new ownership has experience managing institutions of higher education.
Dream Center Education Holdings had no experience in higher education when it petitioned the federal Education Department to let it take over Argosy, according to several news accounts.
“We wanted to make sure they understand the obstacles we’re currently facing and protect future students,” said Milbrandt, 34, who moved to the Washington, D.C., area to continue her education after Argosy closed.
Isakson spokeswoman Amanda Maddox said his office will consider the ideas as Congress works on reauthorizing the Higher Education Act.
Meanwhile, some former students are seeking help from state officials.
Fifty former Argosy students have requested tuition refunds from a state account with money contributed annually by each private school in Georgia, said Kirk Shook, executive director of the Georgia Nonpublic Postsecondary Education Commission. Five requests have been processed thus far, Shook said.
State law says the maximum amount that may be paid from the fund in claims on behalf of all students of any single defaulting postsecondary educational institution is $250,000 per campus, regardless of the fact that total claims may exceed that amount, Shook noted.
Shook said his office has tried to help the students through mass emails with information about options to continue their learning.
Experts like Yasmin Farahi, policy counsel for the nonprofit Center for Responsible Lending, say states like Georgia must make it easier for students to understand what options they can pursue when their school folds.
Meanwhile, students like Salgado are grateful there’s some effort by McBath and others to explore ways to protect students. She has a son who is a high school senior who toured a college campus this week and another son in middle school. Salgado held back tears as she spoke about her fears that they could encounter what she faced at Argosy earlier this year.
“What happened to me, I have to be thinking: ‘Could this happen to (my son)?’” she said.
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