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Shattered: Faces of the For-Profit College Crisis

‘I Refuse to Pay for Something I Didn’t Get’

The U.S. Department of Education is revising its rules on federal student loans — how colleges can access the money and how students pay back the debt.

Marie Johnson-Lattier sitting at a table.
Today, after a long string of deferments and forbearances, Marie Johnson-Lattier's initial $5,425 student loan balance has ballooned to more than $105,000. (Alexander Shebanow)

When Marie Johnson-Lattier dropped out of a training program at for-profit California Institute less than two weeks after she began, she asked the school to return her loans to the federal government, as required by law. Instead, they kept the money, making Johnson-Lattier responsible for the loan — and its repayment.

Because of interest capitalization, her initial loan balance grew from $5,425 to $105,000. California Institute’s unauthorized use of federal loan funds was illegal, and the school was eventually shut down in 1990 after the owner was convicted of defrauding the U.S. Department of Education.

In 2018, U.S. Department of Education Secretary Betsy DeVos weakened the rules about how students can get debt relief when colleges take their student loan money under false pretenses, as California Institute did with Johnson-Lattier.

Now, in a process called negotiated rulemaking (or NegReg), the Department of Education has the opportunity to strengthen its rules about federal loans so that students have greater protection, including regulations on false certification discharges (debt relief for students when schools wrongly enroll them), interest capitalization, income-driven repayment, and borrower defense to repayment (debt relief for students who are misled by predatory colleges).

Read Johnson-Lattier's story to learn about why students need recourse from predatory colleges’ false use of student loans.

This portrait is one in a series produced by Student Defense and filmmaker/photographer Alexander Shebanow and is featured in the documentary Fail State.

What Is NegReg? And Why Does It Matter?

On Oct. 4, the U.S. Department of Education began negotiated rulemaking, where it makes regulations to clarify any ambiguities in higher education lawmaking. Within the policy community, it is also called “NegReg.”

The 2016 negotiated rulemaking sessions established several rules that barred some schools from getting class-action waivers (to keep groups of students from suing) and from having pre-dispute arbitration agreements when students sue. It also made it easier for students to get debt relief (borrower defense to repayment) when they are cheated by unscrupulous schools.

During the 2018 rulemaking sessions, Education Secretary Betsy DeVos reversed many of the rules made in 2016, to the benefit of predatory colleges and to the detriment of student borrowers.

The current negotiated rulemaking sessions, now under Secretary Miguel Cardona, have the potential to restore and improve upon the 2016 rules, increasing accountability for colleges and aiding students in debt relief.

In 1989, Marie Johnson-Lattier heard a knock at the door of her Long Beach, California, home. Unemployed and caring for her 3-year-old daughter and newborn son, she opened the door to find a flyer advertising, “Get paid to go to school.” In the smaller text below, the flyer offered free lunch and free transportation to and from California Institute, a for-profit college in Long Beach.

Nearing the end of her unemployment benefits and needing to provide for her children, Johnson-Lattier decided to call the school. The recruiter who answered quickly asked when Johnson-Lattier would like to attend the school’s orientation program. Johnson-Lattier asked for more information about the school, but the recruiter promised her that her questions would be answered at the orientation, scheduling a bus pickup from her home.

When orientation day came, Johnson-Lattier arrived at the pick-up spot to find a dozen other residents from her housing project waiting for the same bus. The shuttle took them to orientation where a recruiter explained the college’s programs, promising a fast track to a high-paying career. Johnson-Lattier enrolled to train for a job as a bank teller, and school officials rushed to sign her up for student loans that would help pay for her classes and feed her children.

A few days later, Johnson-Lattier and her fellow classmates began a two-week-long prerequisite training course covering basic math and reading skills. In an interview with Student Defense, Johnson-Lattier said that many of her classmates struggled through the course because — despite having been accepted to the college — they couldn’t read or write.

Johnson-Lattier finished the prerequisite course and began the bank training program. But just three days into the program, she fell so ill that she was bed-ridden for more than a week. When she returned to campus, she was told she was no longer enrolled — California Institute had dropped Johnson-Lattier from the program.

Still recovering from her sickness, she decided not to re-enroll. Instead, Johnson-Lattier asked California institute to return her loans to the federal government. By law, the school was required to return at least 90% of the funds because she had been dropped from the program within two weeks of beginning it.

The financial aid department assured Johnson-Lattier that her loans were returned, but when she called her loan servicer to confirm, they told her the balance remained. She called California Institute repeatedly, and each time they assured her that the return simply hadn’t been processed yet by the loan servicer. After a month with no change in her loan balance, Johnson-Lattier took a city bus to campus where she asked for documentation proving that the loans were returned. Instead of providing the documents, California Institute had a security guard escort her off campus.

That was 24 years ago. California Institute never did return her loans, and Johnson-Lattier never got the education they promised. Today, after a long string of deferments and forbearances, her initial $5,425 loan balance has ballooned to more than $105,000.

California Institute was shut down in 1990 after its owner was convicted of defrauding the Department of Education and making false statements.

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