Gerry Canavan

the smartest kid on earth

Why Is the U.S. Government Enforcing Debts Owed to Fraudulent For-Profits? Beauty School Edition

with 8 comments

The debt collectors call so often that Amarilis Madera knows them by name. For years, they have threatened to take her possessions and drain her bank account. In February, her $5,000 tax refund was seized.

“I needed that money to live,” Ms. Madera, 49, a mother of three, said recently through a translator. “I almost lost my apartment.”

Her financial burden was caused not by reckless spending, but by a decision she made more than 17 years ago and deeply regrets: enrolling at the Jon Louis School of Beauty in the Bronx.

Written by gerrycanavan

July 29, 2013 at 11:26 am

8 Responses

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  1. Um… because the debtors failed to complain, that’s why.

    > Last month, after receiving calls about the loans from The New York Times, the Education Department agreed to discharge 17 loans for Wilfred graduates and is considering two discharge applications for Jon Louis graduates.

    > Stephen Spector, a spokesman for the department, said in an e-mail that the department was “responding to requests for loan forgiveness and will continue to work with borrowers on this matter.”

    They have my sympathy, but not much more than criminals who fail to ask for a lawyer or taxpayers who fail to itemize deductions.

    Alex Chaffee (@alexch)

    July 29, 2013 at 1:11 pm

    • “Ms. Connor, the lawyer for the legal group, said the Education Department should take “proactive and common-sense” steps to contact all debtors who may be eligible for discharge because it was aware that the schools were fraudulent.” Yes, why aren’t they?


      July 29, 2013 at 1:13 pm

      • Because that’s not how bureaucracies work. This story is orders of magnitude less scandalous than, say, that the SEC and Justice Department failed to take proactive and common-sense steps to prosecute fraud during the 2008 financial crisis, given that that’s actually their *mandate* (whereas the Education Department is geared towards lending and collecting, and *re*actively responding to requests for deferment and cancellation). Again, this sucks for those affected, but it’s just a cautionary tale about normal bureaucracy, not even Kafkaesque.

        Alex Chaffee (@alexch)

        July 29, 2013 at 1:26 pm

      • The IRS contacts me when I don’t take deductions I’m entitled too; the Department of Education can’t contact people whose debts they’ve determined to be fraudulent? That would be a much better use of their time than enforcing those debts.


        July 29, 2013 at 1:30 pm

      • > The IRS contacts me when I don’t take deductions I’m entitled to

        They do? Are you sure we’re talking about the same Internal Revenue Service?

        Alex Chaffee (@alexch)

        July 29, 2013 at 1:34 pm

    • Yes, they do! Bureaucracies can do more than one thing, that’s kind of the point of them.


      July 29, 2013 at 1:36 pm

  2. Also, the North Pole didn’t melt all the way through (yet). Take a deep breath, have a milkshake, go see a movie.

    Alex Chaffee (@alexch)

    July 29, 2013 at 1:30 pm

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