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After Vocational School Closes, Debt-laden Students Decry Fraud

In the wake of Harrison Career Institute’s closure in 2007, many students have been left paying back loans without a diploma.

Delaware resident Kim Cawley had dreams of becoming a cardiovascular technician. And in 2005, she enrolled in pharmacology classes at the Wilmington, Del., campus of the Harrison Career Institute.

In its prime, HCI had more than a dozen campuses across the Delaware, New Jersey and Pennsylvania region. But a host of financial problems and decreasing student enrollment forced the institute to close 13 of its campuses, including the one in Wilmington.

Although the campus permanently shut its doors in 2007, Cawley says she’s still being forced to repay about $10,000 in student loans. Cawley is one of hundreds of students — including many minorities — across the country who have acquired student loan debt with the end goal of earning a much-desired credential.

But Cawley says she shouldn’t have to pay for a credential she didn’t receive.

“I’m paying on student loans, and I didn’t get a certification or diploma or anything … I’m sending them money for education purposes that I did not get, and I feel that it’s fraud,” says Cawley. “The Harrison Career Institute just shut its doors and walked away.”

Patrick Dunn, a state-approving agent for private business and trade schools for the Delaware Department of Education, adds that about 100 students were unable to finish their studies or receive diplomas. However, he has been successful in guiding about a dozen students through the federal loan forgiveness process since the school closure.

“Unfortunately, there were several former students in that situation who were still faced with a loan,” says Dunn. “I was not able to help everyone 100 percent.”

HCI and dozens of other vocational and technical schools have closed in recent years amidst claims of fiscal mismanagement, accreditation struggles and other issues, according to recent reports. HCI officials could not be reached for comment.

In the event of a school closure, officials at the U.S. Department of Education say that they first work with the respective state agency that licensed the school or institution to provide what is called a “teach-out” program. As part of this program, the closing institution and the state arrange for students to use any federal money they receive to continue their education at a neighboring institution.

Dunn says that the Delaware Department of Education was able to offer a teach-out program, and at least 30 HCI students were able to enroll in another local trade school and finish medical-related studies.

“The objective is to always try to help the students complete their education,” says Stephanie Babyak, an Education Department spokeswoman.

If a teach-out is not possible, students may file a “closed school discharge” and submit a discharge application to the DOE to absolve any outstanding federal loans, Babyak says. Federal loans may be forgiven if a student was enrolled when the school closed and “could not complete the program because of the closure,” according to the DOE Web site. Department officials also suggest that students contact the state licensing agency where the school was located if they need access to their academic records.

Babyak adds that student loan borrowers should also contact their respective private loan holders for specific information about the prospect of private loan discharges.

Sallie Mae — one of the largest providers of private student loans in the country — offers private career training loans for students enrolled in continuing education programs such as technical and trade school training. Students who have this type of loan and are affected by a school closure may contact Sallie Mae to set up an automatic, 90-day interest-free administrative forbearance, says Beth Guerard, a spokeswoman for Sallie Mae.

“We run a report to estimate the initial number of borrowers who may have been affected based on average lengths of study and disbursement dates,” says Guerard. “We continue to add borrowers to the list as borrowers notify us (that) they were affected by the school closure.”

She adds that Sallie Mae officials also advise students to contact the DOE directly to find out information about their state’s tuition recovery fund or bond.

“As the regulator of licensed schools in its state, the state’s department of education often has recovery funds that may be used to assist students,” she says.

Meanwhile, many dissatisfied and frustrated students are seeking legal action. But Dr. Anita L. Allen, Henry R. Silverman Professor of Law and Professor of Philosophy at the University of Pennsylvania, says students in this kind of situation may not have any legal recourse since it is possible to continue a credential-granting program at another school.

“Generally speaking, if you pay for a semester, you get a semester.  If you pay for a year, you get a year. If I enter into a nursing program in 2008 and then the school closes in 2009, I don’t get my money back. I just have to go someplace else. The question is, did you get what you paid for?” says Allen.  She adds that students should do some advance research and make sure that the schools they are interested in attending are not experiencing any kind of financial crisis.

Kim Cawley’s husband, Timothy, notes that his wife was denied a loan discharge by two separate loan providers, but the couple is still contesting that decision.

He adds, “We don’t mind paying for something she received, but when you don’t receive anything for something you paid for … there’s a problem. I think this whole thing was a complete scam.”

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