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InvestigateTV – In 2009, Michelle Reed was a young single mother. She was disabled, living in poverty and dreaming of a better life. A conversation with a recruiter for the Art Institute of Pittsburgh made her think things could be different.
“You could become the next Annie Leibovitz,” she recalls being told, referring to the famous photographer. That possibility fueled her decision to enroll. “They told me I had a lot of opportunity. I had hope.”
She took out more than $30,000 in federal loans to fund her education, considering it an investment into the American dream.
But it quickly became a nightmare as Reed realized the program she was on the hook for financially wasn’t delivering on its promises. The credits she paid for classes wouldn’t transfer to other schools, and she ended up only being able to obtain an associate’s degree.
In a court filing, Reed claimed the school’s “fraudulent practices left me unprepared for the workforce,” saying her degree carries no weight.
Michelle Reed recently learned the federal student loan debt that has haunted her for nearly two decades will be wiped clean as a result of a lawsuit filed by the Project on Predatory Student Lending.
Nearly two decades later – even with the school out of business – Reed still has thousands in federal loan debt. At one point, she said, the balance ballooned to as high as $100,000.
“Looking back, I feel embarrassed. I feel taken advantage of,” she said. “It has affected my whole adult life. It’s like a black cloud hanging over me.”
Reed is not an outlier. An InvestigateTV analysis of court records, settlements, and federal data found thousands of other students enrolled in a for-profit schools of higher education that have failed to deliver, leaving them in tremendous debt that often haunts them for a lifetime.
The difference between for-profits and traditional colleges
When Reed enrolled in the Art Institute’s online program, she envisioned becoming a graphic designer for a magazine like Rolling Stone. Instead, her life ended up more like a cautionary tale inside its pages.
She’s battled cancer and homelessness, all while saddled with federal loans that have, at times, forced her to choose between paying rent and writing a check toward her student debt.
As she balanced the competing bills and battled for her life, the for-profit Art Institute abruptly went out business in March of 2019 – but still there was no relief for Reed or the tens of thousands of other students with unpaid student loans. They were out big sums for schooling conducted by a company that the Department of Education later said “made pervasive and widespread substantial misrepresentations” about employment rates for graduates, salaries and career services.
“It was all too good to be true,” Reed said. “Looking back, I wish I never would have gone to that school.”
When Michelle Reed was diagnosed with bladder cancer in 2018 she was living paycheck to paycheck – struggling with ballooning debt from student loans.
Unlike traditional four-year private or public non-profit universities typically funded in part by tax dollars or donors, the Art Institute was a for-profit college. Hundreds of those types of institutions exist across the country – and are operated as privately owned businesses. They often have a career-specific focus and shorter programs, catering to non-traditional students who may need flexibility – like adult learners or working parents.
Career Education Colleges and Universities (CECU), a lobbying group that represents some for- profit schools, said “for-profit trade schools and career colleges have been shown to be a key contributor in expanding the workforce pipeline to many important and in-demand fields.”
In an email to InvestigateTV, the organization also pointed to data from a 2025 Georgetown University study that highlighted for-profit schools at the top of rankings related to return on investment.
Still, agencies including the Federal Trade Commission and state attorneys general have been vocal that some for-profits can be problematic. They’ve issued warnings about allegations of fraud, abuse and predatory practices with schools offering pricey degrees that students claim didn’t deliver on the promises made when they were recruited.
“They have advertising programs that make them look like an answer to a prayer. Well, they’re not,” said U.S. Senator Dick Durbin, an Illinois democrat who has made warning about the potential pitfalls of for-profit schooling a priority.
In March, Durbin proposed federal legislation with the Proprietary Education Oversight Task Force Act, calling for more oversight of for-profit schools to hold them accountable. The legislation would create a complaint collection system to help people report misconduct and create a so-called “warning list” about for-profit schools that have been involved in illegal activity or that have demonstrated evidence of systemic fraud or predatory practices.
“Predatory for-profit colleges rake in billions in federal student aid but leave students drowning in debt with near-meaningless degrees. We must step in to provide the proper federal oversight to stop this industry from continuing to take advantage of students and taxpayers,” he said in a press release about the proposal.
For the last 12 years, Durbin has written directly to high school principals, teachers, and counselors in his home state, warning about what he says are the “risks associated with attending”.
“They tell them, if you go 10, 20, 30, 40, 50, $80,000 in debt, we’ll have a good job waiting for you at the end of the rainbow. Not true,” Durbin told InvestigateTV.
Challenging the claims of for-profit colleges
For many students, it’s advertising and promotion that can impact decision-making when it comes to enrollment in a for-profit institution. InvestigateTV, in collaboration with the Arnolt Center for Investigative Journalism at Indiana University, examined advertising claims and disclosures for more than 100 for-profit schools nationwide.
Our analysis found dubious claims about post-graduate employment rates from some schools, with one college touting conclusions about the professional status of hundreds of graduates even though only 13 had physically completed an employment survey.
For-profit institution websites we examined also frequently touted relationships with major companies – including stating that graduates had been hired by Amazon or Google without providing any attribution.
Our research also uncovered bold and sometimes vague salary claims made by some for-profit schools that might give students incorrect perceptions about their potential earnings post-graduation.
Missouri-based attorney Andy Smith isn’t surprised by any of it. He won a multi-million-dollar settlement for students of the now-defunct Wright Career College, which operated in Kansas, Nebraska, and Oklahoma before going bankrupt 10 years ago.
The suit claimed students were misled and deceived, with hundreds aggressively recruited with misrepresentations about the cost and quality of academic programs, employment prospects, and career placement.
“They (the students) took on a loan of 60, 80, $100,000 only to be told not only do you have the loan, but the effort you went to to get an education has actually decreased your employability. It’s nonsense,” Smith said.
Attorney Andy Smith has taken on for-profit colleges in court, winning a settlement for students he says “believed the promises that were made to them.”
The case claimed students were encouraged to enroll and take classes with essentially no value and pay for them by taking out thousands in government loans they couldn’t pay back.
“They did not care. What they wanted was the federally-subsidized student grant or loan money, and they needed warm bodies to do it,” Smith said.
Students seeking justice have several pathways for action
Civil lawsuits and enforcement action taken by state agencies have helped some students nationwide get money back from for-profit schools they feel failed them. But even those settlements, InvestigateTV found, may have only provided a fraction of the money they need to cover the federal loans. That’s where a government program called “Borrower Defense” comes in.
“Borrower Defense is a program where if students feel like they were misled by a variety of factors, they could submit an application to the Department of Education and potentially have any remaining student loans forgiven,” said Robert Farrington, who runs the “The College Investor” website,. For years he’s been tracking Borrower Defense claims, lawsuits and settlements against for-profits – trying to inform students before they spend.
Robert Farrington, who runs the College Investor, has long used the site to track settlements and lawsuits against for-profit schools and offer advice for prospective students.
Farrington believes some for-profit schools do have value, especially for specific trades and careers. Students who need flexibility can also benefit, he said. But he emphasized the need to read claims closely.
“What we’re seeing is real fraud and real misleading statistics and tactics to get students to enroll in these schools,” Farrington said. “That’s different than, ‘I got a degree and it didn’t pan out, and I’m frustrated by it.’”
InvestigateTV analyzed years’ worth of data from the Department of Education related to Borrower Defense claims – which require submissions of evidence of misconduct, predatory behavior or deception as well as proof of enrollment. Between 2015, when the program really took off, and this past January, we found there have been more than 1 million applications submitted for loan relief.
Students from California, Florida, and Texas account for more than a third of those applications. At least 75% of all claims have been filed by students from for-profit institutions.
InvestigateTV also looked deeper at the 300 schools with the highest number of Borrower Defense claims included in the most recent federal data. 59 of those institutions were based in California, 29 in Florida and 20 in Texas. 258 of the top 300 claim recipients are for-profit schools.
Billions in loans have already been forgiven through Borrower Defense, the data shows. And the Department of Education also details the decisions behind making students whole in notices posted on its website related to schools that span the nation.
Still, hundreds of thousands of students are still waiting on decisions – caught in a massive backlog and a court battle as their loan bills keep showing up in the mail.
“Once they file, they can get a refund of payments that they have made, but they might still have to pay their loans while this is all going on,” Farrington said. “That money does still come out of their paycheck every single month as they’re paying these loans, and it can take time to resolve.”
Inaction on Borrower Defense claims prompts class action lawsuit
Michelle Reed is one of many students who continued to grapple with federal student loan debt while her Borrower Defense claim was up in the air.
“They wanted like $600 a month payment, and I couldn’t afford that at the time. So, it was either pay this or pay my rent. I chose to pay my rent. But they have garnished my income tax (refund). I’ve had threats to garnish my income. It’s just been a financial nightmare,” she said.
That ongoing nightmare involves complicated legal action at the federal level.
After Borrower Defense claims from students like Michelle were ignored by the government, a group called the Project on Predatory Student Lending filed suit against the Department of Education on behalf of a group of students, saying it was refusing to process their applications seeking relief, that was back in 2019.
“The Department has ignored the growing pile of Borrower Defenses, reduced its capacity to decide Borrower Defenses, and diverted its increasingly limited resources to un-do all of the prior administration’s work,” attorneys for the Project on Predatory Student Lending said in its complaint. “In short, the Department has intentionally adopted a policy of inaction and obfuscation.”
The Department of Education has not responded to numerous requests for an interview.
But the lawsuit against the agency has brought victory in waves for borrowers, with an initial, first-round settlement in 2022 essentially cancelling federal loans for thousands of students. Many others who joined the suit after that original filing in a post-class action are still in limbo, anticipating decisions soon.
In response to questions sent by InvestigateTV, Career Education Colleges and Universities – the lobbying group – said in an email that it supports the ability of students who believe they were misled or defrauded by a school to seek forgiveness of their loans, but emphasized the vast majority of Borrower Defense claims have been denied because they are without merit.
The organization claims unscrupulous, predatory groups reach out directly to students and graduates, encouraging them to file – using the program as what they call a “fishing expedition”.
“This impacts all institutions of higher education, not just for-profit schools. Frivolous claims are being submitted to thousands of schools across the country, forcing administrators to use time, resources and personnel that would be better utilized on student services,” the organization’s spokeswoman wrote.
Michelle Reed is among the thousands of students who found out in late January that their debt would essentially be wiped clean as a result of the lawsuit related to stalled Borrower Defense claims. The decision comes nearly four years after she filed her claim and joined the legal filing to push submissions like hers along.
The elimination of her debt, she said, would be life changing.
“I just think of the possibility that I could finally not be homeless and buy a house. And I could have my own space. To heal and recover,” she said.
Yang Chao, Carson Johnson, Claire Tips, Kelsey Pease, Nora Uber, and Virginia Welp with the Arnolt Center for Investigative Journalism at Indiana University contributed research to this report.
