Struggles for veterans with student debt continue under Biden administration

  • The Biden administration has taken big steps to forgive the debts of students who've been defrauded and misled by their schools, and many veterans have seen relief.
  • Still, many others remain saddled with the loans and unable to get a good education.

Cerena Jones served in the U.S. Air Force from 2000 to 2005, and not long after used her G.I. Bill to attend Everest College in Dallas.

Getting her associate's degree in business administration, she hoped, would be the beginning of a long career.

She soon realized, however, that the school had lied to her about the quality of its courses and by promising to get her hired after graduation. Corinthian Colleges, the founder of Everest, would later be accused of predatory and unlawful practices and file for bankruptcy.

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"They advertised through commercials and on the visit that they had this great career center that helps you find a job," Jones, 42, said. "That didn't happen. My degree is trash, just a piece of paper."

Still, more than a decade later, the veteran has $30,000 in federal student loans from Everest.

She plans to apply for debt forgiveness through the U.S. Department of Education's borrower defense loan discharge process, which is aimed at making defrauded students' whole. But busy working and raising two children, the single mother hasn't had the time to start the application process yet.

"I just feel like I'm going to be stuck in this black hole forever," she said.

Under President Joe Biden, defrauded student loan borrowers, including many veterans, have seen a sharp reversal in how their requests for loan forgiveness had been treated by the former Trump administration. Since Biden took office, more than $9 billion in student loans have been canceled and forgiveness programs have been overhauled and improved.

Still, many former service members who were misled by their schools are still struggling with their federal loans, advocates say.

"We want them to get through the borrower defense backlog," said Christopher Madaio, vice president for legal affairs at the nonprofit Veterans Education Success.

Many other defrauded veterans need more guidance and support just applying for the forgiveness, Madaio said.

"It's complicated, and even the Department of Education's website doesn't make clear what makes a strong application versus a weak application, and what are good facts to include."

On one level, it's a surprise that veterans are struggling with student debt at all.

The G.I. Bill essentially offers veterans a free ride at public colleges in any state, and picks up much of the tab at nonprofit private schools.

However, because for-profit schools tend to have higher tuitions than public and nonprofit colleges, veterans who attend them end up needing to borrow. Not all former service members are made aware of this reality, said Carrie Wofford, president of Veterans Education Success.

"Many of them say, 'The GI will cover everything, and by the way here's some paperwork you need to sign,' and it turns out it's loans," Wofford said. "That's one of the many things they lie about."

For-profit schools prey on veterans because of their GI Bill money, Wofford said, and also because of what's been known as the so-called 90/10 loophole. Under a law in the Higher Education Act, for-profit schools are required to get at least 10% of their revenue from private funds, while the rest can come from federal aid from the U.S. Department of Education.

But since GI Bill money comes from the U.S. Department of Veterans Affairs, rather than the Education Department, these schools can use this aid to make up their non-federal requirement.

"It was an accounting gimmick, but it incentivized for-profit schools to target veterans," Wofford said. (The American Rescue Plan Act, the $1.9 trillion stimulus package passed in March, addressed this by closing the loophole, but the effective date is delayed until 2023.)

This all explains, at least in part, why about a fifth of undergraduate veterans enroll at for-profit schools, more than double the share of students who are veterans (9%), according to a rough estimate by higher education expert Mark Kantrowitz. Despite the generous GI Bill benefits, at least 320,000 veterans are saddled with student loans, and more than 11% are in default.

Despite improvements for defrauded students under the Biden administration, Wofford said it was head-scratching that more applications for relief haven't been granted when it's clear that the schools in question were fraudulent. Some of these schools even remain entitled to federal funding.

"There's enough government evidence about some schools that they need to start cutting schools off," she said. "Why is that school still eligible for federal student aid? Why are they still allowed to get GI Bill [funds]?"

The White House did not respond to a request for comment.

Even for veterans who've gotten their student loans forgiven, problems remain.

David Reyasbautista, who served in the marines from 1999 to 2003, also went to a school owned by Corinthian Colleges, which he said left him worse off.

Reyasbautista, 43, believed his education would lead to a position at one of America's largest car companies. "They said, 'You'll hear from Chevrolet, Ford and Dodge,'" he said. "I wanted to make my kids proud." Reyesbautista, who now lives in Riverside, California, has six children.

But after he graduated, he couldn't even land a job at a local mechanic shop. "Nobody would hire me," he said. "They would look at my certificate and laugh." 

This year his borrower defense application was approved by the Biden administration and his federal student loans were canceled. But he's not eligible to use his G.I. Bill education benefits again. Advocates say Congress hasn't yet given veterans the right to restore their G.I. Bill in cases of fraud, except if the school closed or was disapproved for the funding, and even then the rules are narrow.

Reyasbautista wants to go back to school to learn physical education and training, but he can't afford to do so. His job issues persist today, and he's currently unemployed.

"It's excruciating because I know I can put it to better use if I had a second chance," he said.

He continues to make his case to the Department of Veterans Affairs for why he should be able to go back to school, and he lamented the fact that it wasn't easier after the government already determined his first school deceived him.

"Why should I have to fight them to back what I deserve?" he asked.

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