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July 29, 2013 4:07 PM For-profit Scams Are Nothing New

By Daniel Luzer

Critics of proprietary schools often point to the trouble graduates of such institutions have finding jobs, despite assuming massive debt to get their diplomas. But this problem is not exclusive to people who graduated from the behemoths or for-profit education, the University of Phoenixs, and Kaplans, and Corinthian Colleges of the world.

According to an article by Emily Rueb in the New York Times, many graduates of scam cosmetology schools shut down in the 80s and 90s were never able to find appropriate jobs, but they still have to pay the debt they accumulated:

Hundreds of women in New York City, and maybe more, are in similar straits because they attended cosmetology schools like Jon Louis, the Wilfred Academy of Hair and Beauty Culture, and Robert Fiance Hair Design in the 1980s and 1990s.
“It would have been worth it for a school that gave me a future,” said Ms. Madera, who makes about $25,000 a year working at a day care center in the Bronx.

Madera, 49, enrolled at the Louis School of Beauty in the Bronx some 17 years ago. The school closed years ago, amid allegations of financial aid abuse. Madera was never able to obtain a good job as a beautician (and those jobs certainly exist) or pass the state examination for cosmetologists, but she’s still on the hook for the debt.

Many graduates of these three scam schools are now suing to have their loans discharged. According to the article, the New York Legal Assistance Group is working to help former students based on the “false-certification discharge,” which allows for loan “if it can be proved that the schools falsely certified that the students without high school diplomas or G.E.D.’s could benefit from the courses.”

The loan forgiveness isn’t automatic, however; individual students apparently have to request loan forgivenesses separately.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer