How 7,500 borrowers are fighting to get student loans expunged

- As college costs continue to rise so do the number of appeals for loan forgiveness. Now, thousands struggling to realize the well-paying careers they were promised are taking action by appealing to the federal government to have their debt expunged. They claim some colleges made false promises about potential earnings, and how accepted their degrees would be in the job market.

Most of those who applied to have their debt expunged in the last six months attended for-profit colleges and claim they were victim of illegal tactics during their recruitment according to the Wall Street Journal. So far 7,500 borrowers have applied to the program.

Some of the students who have applied attended ITT Technical Institutes and The Art Institutes. Both schools have campuses in Minnesota.

The law, however, is so obscure it’s been applied in only three instances last year. It is starting to get noticed. And the U.S. Education Department is getting flooded with appeals from unsatisfied graduates.

“I think they've got a complete mess on their hands,” said Andrew Gifford who works as a certified financial planner at North Star Resource Group in Minneapolis. “If the institution is consistently telling them that now this is how it works, this is what we've got, these are the people that we have, these are our options for employment and are presenting them with numbers that are supposedly correct; you could say they were materially misled.”

The Wall Street journal reports almost all of the borrowers vying for expungement under a law that forgives debt if they can prove illegal tactics were used to recruit them - are former Corinthian College students. Hundreds of others attended ITT or the Art Institutes.

Art Institutes spokesman Bob Greenlee issued a statement reading in part:

"EDMC recently entered into agreements with attorneys general of 39 states and the District of Columbia that incorporate more transparent recruiting and disclosure standards, which the company hopes will serve as a model for higher education. These agreements included no admissions of wrongdoing."

Minnesota is not one of the 39 states.

An ITT Technical Institute representative tells Fox 9 that 159 of their former students filed for expungement, adding, "There is not a single case against ITT has proven or verified the claims alleged." Financial experts say expect it will take time for the Education Department to sift through the cases.

“We're going to have to sort through those and figure out which ones are relevant and legitimate claims and which ones are just those who are a little disgruntled with their job prospects,” Gifford said.

The law which passed in 1994 is considered overly vague because it doesn't specify what proof is needed to demonstrate fraud took place.

It should be noted that all the schools specifically mentioned have been subject to federal investigations over the last few years.

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