In its wake, the closure of Vatterott College left hundreds of students grappling with debts to the tune of $40,000. Most had borrowed a minimum of $10,000 just for the core degree and more for ancillary expenses. These people had invested their time and hopes and above all money that they did not have, hence had to be borrowed at interest rates of at least 5%-12%.
And what did they get in return- A degree that wasn’t worth the paper it was printed on and qualification that no employer wants to touch with a ten feet pole. By all accounts and in any way that you look at it, these individuals are the victims of this scam, which has literally torn and shredded the very fabric of their life. The questions now are these –
• Is anybody willing to cut them some slack because they were at the receiving end of the unscrupulous practices of a for-profit organization? Or,
• Is the victimization of the victims continuing unabated?
If you have attended Vatterott College, continue reading to know the truth about the possibility of student loan forgiveness. Remember that this happened at an institution which was in business for 50 years before it unceremoniously and suddenly shut shop leaving hundreds in a quandary.
This means it could happen at any college. So, even if you did not attend Vatterott, continue reading to know how to deal with such a situation, if it ever befalls you.
Vatterott College- The history!
The for-profit institution was admitting students by the droves since its inception in 1969 in Missouri. The college was at one point an accredited career training institute that offered vocational training in dozens of subjects across its 16 centers.
In addition to these, they also offered online programs that could be taken in conjunction with their campus programs or on their own. These diploma and associate’s degree courses ran the gamut and included programs in:
• Dental sciences
• Paralegal studies
• Building maintenance
• Diesel and small engine mechanics
• Culinary arts
• Veterinary science
• Wireless communication
• Court reporting
• Network technology
• Computer system maintenance
• Sales and marketing
• Public administration and others
So, it is easy to see how hundreds of students got reeled into taking courses offered by the institute. Students were told that on average, it would take 90 weeks of academic work to earn their certificates.
They were also told that completing the course would greatly improve their job prospects and in some cases, students were even promised that they could use the credits from Vatterott Programs to continue their education in their chosen field. The college operated from campuses in:
• Missouri- Joplin, Kansas City, Berkeley, Springfield, St. Charles, St. Joseph, Sunset Hills (South County).
• Oklahoma: Oklahoma City and Tulsa
• Tennessee: 2 campuses in Memphis
• Kansas: Wichita
• Illinois: Fairview Heights, Quincy
• Ohio: Cleveland
• Iowa- Des Moines
The background story: What exactly happened at Vatterott College?
Surprisingly, the scam was very simple and allegedly involved just 3 perpetrators and yet it missed the notice of authorities for years. In fact, even after the whistle was blown on their fraudulent activities, the college continued to operate for a few years till it finally shut down all its campuses in 2018.
Fake certificates for real loans: The trouble started brewing for their nefarious operations when three senior management personnel were implicated in and eventually pleaded guilty to fraudulently obtaining federal student loans for attendees who were ineligible for these.
Their modus operandi was deceptively simple, and possibly, that is how and why it escaped the attention of the relevant authorities and the unsuspecting students. Individuals, who did not have their GED or high school certificate were enrolled for various courses.
The students walked right into it: The trio manufactured fake certificates and used these to secure federal student grant loans, which are not available for students who do not have their GED. Moreover, the students were told to convey on their application form that they would have the required GED by the start of the program. Students were also told to enroll in GED programs and submit these requisition forms with their loan applications.
In a nutshell, unassuming students were told that it is possible to get vocational training without their GED and the best part was that they could pay for these courses with federal loans. I know that a lot of you would question the naiveté of these students.
But imagine a person who is in a bad place professionally and personally, and this institute that no doubt seems legit offers him a way out. Would you take it? Most of us would, and without a lot of questions asked! So, it’s no wonder that these students fell for it hook, line and sinker.
Of course, eventually, the fraud came to light; the trio pleaded guilty and they were thrown out. But, the college continued its operations unabated. This was in 2009.
Oh, those worthless certificates!
The real problem started in 2014 when a student who had enrolled in a nursing sciences program filed for damages stating that the institute lied to her about the job prospects and the academic potential of the course she had enrolled in. This was a classic case of a person being lured into buying a worthless product/ service, in this case, a certificate program, with the bait that it would make their lives better.
The jury in Kansas agreed with her claim and awarded her over $2 million in actual and punitive damages. Soon enough, other students realized that they had been sailing in the same boat as the plaintiff. At first, Vatterott management denied all claims. But, once the verdict went against them and a class action suit was initiated, they threw in the towel.
The college was asked to cough up $13 million in damages. Yet, the fact remains that not all students could recover the money they had spent, particularly those who had already completed their courses or were very near completion. And, this brings us to the most important question of the day-
Is there any hope of student loan forgiveness for the victim of the Vatterott College Scam?
Unfortunately, like all debt-related questions, there isn’t a straight-up, “Yes” or “No” answer to this one. It all depends on what kind of loan you have. I will cut through the chase and give it to you simply- Student debt forgiveness is only possible if you have taken out federal loans.
Regardless of your circumstances, private lenders will not forgive/discharge/cancel your student loans. Does this mean that all hope is lost for those who are struggling to repay a private student loan that has earned them nothing more than a piece of paper?
I won’t sugar coat things for you here. Yes, you are up the proverbial creek, but you do have a paddle to wade your way out. Let’s talk more about what can be done.
Vatterott College loan forgiveness- Federal Loans
If you have taken out a federal Direct Loan, Perkins Loan, Parent Plus Loan or FEEL loan, you can get a 100% loan discharge (Closed College Loan Discharge or CCLD) if you meet the conditions listed below:
• You were an enrolled student of the college when it closed down and could not complete your coursework/program because of the closure.
• You were on a leave of absence, which was approved by the school when the institution closed down.
• The school closed down within 120 days of your withdrawal from it (Aug 19, 2018).
If you meet one or more of these conditions/criteria, you can apply for CCLD and have 100% of your student debt forgiven. However, you will not be eligible for discharge of debt if:
• You left school (withdrew from all classes) more than 120 days before the closure of the school.
• All your coursework for the program was completed before the closure of the school, even if you have not received your certificate or diploma.
• You are enrolled in another, similar academic program of comparable value at another education institute.
However, if you enroll in a new school after the closure of the previous academic establishment, and your new school refuses to accept the credits from your old school, you can apply for CCLD. Vatterott College claimed that it offered a “teach-out” program to all students who were enrolled in the institute at the time of its closure.
This is basically a program that allows the school to offer its existing students the opportunity to complete their original coursework and earn their certificate through another academic establishment. However, this is no remedy for worthless degrees. Also, if you do accept the “teach-out” option, you will no longer be eligible for loan forgiveness.
What about loan forgiveness for private student debt?
As discussed above, things are not as simple when it comes to private loans. In fact, with private student borrowing, there is no in-built margin of safety against school closure and fraud as you have with federal loans. So, you will have to pay up! However, you do get the standard recourses for some form of debt repayment relief such as:
1. Restructuring: You will still be paying your dues, but your monthly repayments may be changed along with the loan term to make things more manageable.
2. Consolidation: This involves bunching several small loans with high-interest rates into one, comparatively lower interest rate, secured loan. Your rates will be lower but there is the risk of losing your collateral if you cannot repay.
3. Refinancing: This is simply consolidation is another form. What you do is refinance your existing loan with another one from a different lender or the same lender to lower your total interest payments.
4. Payment plans: Some private lenders do offer payment plans to help students who are currently under financial duress. Depending on your lender, you may be able to shift to “interest-only” payments for a while or stop payments completely for a few months.
The most important thing to understand here is that there is no standard solution when you are battling student debt coupled with college closure. Every financial aspect has to be carefully weighed before a plan is chalked out to repay the debt.
The one undisputed fact here is this-Debt management is the only solution to deal with a private student loan that still hangs on your head while your college has shut its doors. And the core goal of debt management is to make it possible for you to meet your loan obligations.
Unfortunately, if your plan isn’t tailor-made for you, it will fail, and when it does, it will leave you in more trouble than what you started off with.
But, aren’t state tuition recovery funds an option?
Yes, some states do have tuition recovery programs that can come to the rescue of private student debt holders. However, these are not available in all states. Also, even when and where available, these do not offer 100% reprieve from your loans.
However, an experienced credit counselor will be able to work this option into your debt management program and help you to get more out of it. Some of the states that do offer such form of student loan relief include:
• New York
• North Carolina
You will need all the help you can get and some more!
When the grim reality hits you that you have crushing debt and nothing to show for it, hope and positivity evaporate fast! However, with a systematic approach, it is possible to get out of this financial mess.
Think of this as a bad cold that refuses to go away. Sometimes self-medication does not help, no matter what! And that is where you need to accept that you need help from an expert.
If you are struggling with a college loan that funded a degree from an institute that has since closed down, reducing the value of your certificate, rest assured there are thousands of others like you out there.
Many of them managed to wade their way out and so will you because we are here to lend you a helping hand. Our experienced counselors have helped hundreds of students federal student debt forgiveness, even those who were initially denied CCLD.
For those with private student loans, our skill debt counselors were able to use multiple loan management strategies to make it easier and faster for them to get done with their debt. We can help you as well! You can and will get out of this messy situation.
But you will have to start the efforts and for that, you need to pick up your phone and give us a call, we are experts at creating viable and feasible methods out of the mayhem that student debt is. So, what are you waiting for?