The US Department of Education(Department) announced today the approval of over 1,800 borrower defense to repayment (borrower defense) claims for borrowers who attended three institutions: Westwood College, Marinello Schools of Beauty and the Court Reporting Institute. This is the first time the Department has announced approved borrower defense claims for students who attended institutions besides Corinthian Colleges, ITT Technical Institute, and American Career Institute since 2017.
These borrowers will receive 100 percent loan discharges, resulting in approximately $55.6 million in relief. This brings total loan cancellation based on borrower defense by the Biden Administration to over $1.5 billion for nearly 92,000 borrowers.
“Today’s announcement continues the U.S. Department of Education’s commitment to standing up for students whose colleges took advantage of them,” said U.S. Secretary of Education Miguel Cardona. “The Department will continue doing its part to review and approve borrower defense claims quickly and fairly so that borrowers receive the relief that they need and deserve. We also hope these approvals serve as a warning to any institution engaging in similar conduct that this type of misrepresentation is unacceptable.”
The Department is approving two types of claims related to Westwood College (Westwood). First, the Department found that, from 2002 through its 2015 closure, all of Westwood’s campuses across the country engaged in widespread misrepresentations about the ability of students to transfer credits. Despite claims by Westwood, students were generally unable to transfer their credits to other institutions. The inability of Westwood students to transfer their credits meant that they had to—or would have to—restart their education at a different school.
Second, the Department found that, from 2004 until its closure in 2015, Westwood made widespread, substantial misrepresentations to students that its criminal justice program would lead to careers as police officers in Illinois, particularly in the Chicago area. The institution told students they would be able to find employment with the Chicago Police Department and other law enforcement agencies when, in fact, these agencies would not accept Westwood credits in their hiring processes. Borrowers said that instead of obtaining employment as a police officer after graduation from Westwood, they often had to accept minimum wage jobs or jobs that required no degree at all. The result was that students were worse off after attending Westwood. The Department has approved over 1,600 claims, representing approximately $53 million in relief for former Westwood students.
Westwood College was owned by Alta College, Inc. (Alta), which was located in Colorado. Major executives at Alta included co-founder Kirk Riedinger and George Burnett. In 2002, Alta was acquired by Housatonic Partners, a private equity firm located in California and Massachusetts.
Marinello Schools of Beauty
The Department found that Marinello Schools of Beauty (Marinello) made widespread, substantial misrepresentations about the instruction that would be offered at its campuses across the country. These misrepresentations occurred from 2009 until the schools closed in 2016 after the Department denied Marinello’s application for continued participation in federal student aid programs. Borrowers regularly asserted that the schools failed to train them about key elements of a cosmetology program, such as how to cut hair. The Department found that Marinello left students without instructors for weeks or months at a time as part of a pattern of failing to provide the education it promised. As a result, students found it extremely difficult to pass necessary state licensing tests and receive any return on their educational investment. As of today, the Department has approved over 200 claims, representing approximately $2.2 million in relief for former Marinello students.
At all times relevant to the findings, Marinello was owned by B&H Education Inc. (B&H), which was a Delaware corporation. The leaders of B&H included Rashad Elyas, Nagui Elyas, Mike Benvenuti, and Michael Flecker in 2013 when it was sued under the False Claims Act in a lawsuit that resulted in an $8.6 million settlement in 2016.
Court Reporting Institute
The Department found that from 1998 through its 2006 closure, the Court Reporting Institute (CRI) made widespread, substantial misrepresentations about the time it would take to complete its court reporting program. The majority of CRI students were never able to complete the court reporting program and, therefore, could not become court reporters. In fact, data reviewed by the Department showed that just two to six percent of students graduated and those who did finish the program took much longer to do so than the institution claimed. These findings cover each of the institution’s locations, which were in Washington, California, and Idaho. As of today, the Department has approved 18 claims, representing approximately $340,000 in relief for former CRI students.
During the findings period and at the time of its closure, CRI was owned by Alen Janisch.
The findings regarding Westwood and CRI were made possible by evidence provided by law enforcement partners at the offices of the Washington, Colorado, and Illinois attorneys general. The Department will continue working with these law enforcement partners and others to identify institutional misconduct that harms federal student loan borrowers.
Today’s action continues efforts by the Biden Administration to ensure borrower defense and other targeted loan cancellation, forgiveness, and discharge programs deliver relief to students and borrowers. In March, the agency announced that it would grant $1 billion in relief to 72,000 borrowers with approved borrower defense claims related to Corinthian Colleges and ITT Technical Institute (ITT). Subsequently, the Department announced an additional $500 million in relief for 18,000 borrowers with approved borrower defense claims related to ITT. The Department also suspended requests for earnings documentation from borrowers who had received a total and permanent disability discharge; this action reinstated discharges for 41,000 borrowers and will help protect another 190,000 borrowers from the risk of losing their discharges for this reason.
The Department is considering a future rulemaking on borrower defense and held public hearings to receive stakeholder feedback in late June.
For more information about borrower defense, visit StudentAid.gov/borrower-defense.