These student-loan borrowers qualify for debt cancellation through the government, but they’re struggling to get the same relief on their private balances: ‘I feel so defeated. I feel trapped.’

However, the Art Institute was far from what it seemed on paper. According to findings over the past decade by a group of state attorneys general, the for-profit chain misrepresented the value of its programs and forced students to take on unaffordable debt. For example, they found that the schools advertised that over 80% of graduates land jobs within six months of graduation, which was not always the case. All remaining campuses shut down in September 2023.

While President Joe Biden’s Education Department discharged federal student loans for thousands of Art Institute attendees, many more still hold debt that a private loan company, Navient, hasn’t relieved.

For Pucci, it’s nearly $60,000.

“I basically work for Navient. Every paycheck I get goes to Navient,” Pucci, 59, told BI. “The stress has been really killing me. I feel so defeated. I feel trapped, and this has been so traumatic, especially the last couple of months, it’s been really, really difficult.”

While defrauded borrowers like Pucci are eligible to apply for relief from private lenders, Navient’s application for the relief is not yet publicly available. Even if a borrower manages to get the application, it can take hours to fill out and still result in a denial.

The larger issue at play extends far beyond Navient. As millions of Americans struggle with student-debt loads, with some of them being forced to make payments on loans for schools accused of fraud that did not deliver on their promises. While the Education Department has taken a range of steps to cancel student debt for borrowers who went to schools it found guilty of fraud, those with private loans do not qualify for the same relief. The lender, instead, can decide how it wants to craft a relief process, if at all.

Relief is ‘still in its early stages’

Sen. Elizabeth Warren wants answers. In April, she sent an inquiry to Navient about the process and its responsibility to discharge fraudulent loans under a consumer protection tool known as the Holder Rule. A Navient spokesperson referred BI to excerpts from the company’s response to Warren, which stated that the discharge process is “still in its early stages.”

“As part of this enhanced process, we have started to communicate to borrowers who may qualify. As the process continues to roll out, we expect that more borrowers will submit applications, leading to increased levels of cancellation,” the company told Warren.

Navient said that it increased its reserves by $35 million in anticipation of relieving debt for defrauded borrowers, and it’s “committed to addressing valid school misconduct claims” to fulfill its responsibility under the Holder Rule.

The company also told Warren that “in light of the circumstances of some private loan borrowers who attended certain for-profit colleges … particularly those borrowers who suffered a negative impact from school closures or false promises,” it would be appropriate to develop a discharge process similar to that of the federal government for defrauded borrowers.

While Navient promises that more borrowers will gain access to relief through the new application, the lack of clarity surrounding the timeline can impose a financial burden on those borrowers.

Pucci said he obtained an application after filing a complaint with the Consumer Financial Protection Bureau in April, and just two weeks later, he received a denial from Navient. It stated that while Navient “carefully considers a variety of factors in determining whether a private loan should be discharged based on school misconduct,” Pucci did not meet the requirements. Since then, he’s filed another complaint with the CFPB but has yet to get a clear reason as to why he was denied.

The CFPB’s Private Education Loan Ombudsman Julia Barnard told BI in a statement that “for years, my office has heard from frustrated victims of predatory schools who are now struggling to get their private lender to cancel their fraudulent loans.”

“A key measure of a relief process is whether qualifying borrowers get their fraudulent loans cancelled,” Barnard said. “My office (and the CFPB more generally) is watching to make sure that student borrowers get appropriate relief and we will step in to help where we can.”

Pucci said he cannot afford to pay off his private loans for much longer, but he doesn’t know what else he can do aside from wait and hope that Navient will eventually give him the same relief the government already did.

“I made my decisions. I took my responsibility,” Pucci said. “But all the investments I need to do for my own business are impossible. I can forget about buying anything anymore because of how much I have to pay Navient.”

‘I’ve spent so much time feeling so alone and isolated’

Theresa Christman’s story is similar to Pucci’s. The now 40-year-old attended the for-profit International Academy of Design and Technology, which was included in the 2022 Sweet v. Cardona settlement that discharged student loans for federal borrowers who attended a long list of schools. However, she still has about $22,000 in private student loans serviced by Navient that she can’t shake.

“That $400 a month payment was hard, especially when I couldn’t afford to eat or pay my bills for a really long time,” Christman told BI. She said she had to forgo car insurance, live on food stamps, and drop out of school so she could work full time. “I was still only bringing in $11 an hour, and I was in California, which is not cheap. So it was hard.”

After filing a complaint with the CFPB, Christman said she received the school misconduct discharge application from Navient — but due to the lengthy application and the amount of proof required, she hasn’t had the time to put it together yet.

“For each section, I am writing pages and pages and pages for each answer. So it’s taking me a really long time to do,” Christman said. “I don’t want to give Navient any reason to deny my claim.”

The Project on Predatory Student Lending — an advocacy group working to help defrauded borrowers — launched an awareness campaign earlier in June to make borrowers aware of Navient’s discharge application, including an example of the blank 12-page application borrowers are required to complete.

Eileen Connor, director of PPSL, told BI that the process “is really opaque” for borrowers, and it’s forcing them to jump through unnecessary hurdles to get relief.

In contrast to Navient’s process, most federal borrowers “haven’t had to apply at all because the department has said that they have enough information in their possession to know that there was a widespread pattern that impacted, in some cases, everybody who went to the school,” Connor said. “So I don’t really know why that wouldn’t be the same for these loans.”

The lack of clarity going forward has left Christman in a limbo state, not knowing where she’ll land once she submits her application.

“I’ve spent so much time feeling so alone and isolated,” she said. “The financial aspect has been absolutely devastating, but it’s also affected my mental health so much.”

‘I can finally breathe again’

For some borrowers, the time spent on the application paid off.

Victoria Linssen, 59, and Jennifer Nave, 60, attended the for-profit Brooks Institute and DeVry University, respectively. Both received federal relief through the Sweet v. Cardona settlement and then struggled to be free of their private debt through Navient.

Earlier this year, Linssen received the school misconduct discharge application.

“I just slowly but surely made my way through it. I would say it took me somewhere between eight and 12 hours to fill it out,” Linssen said.

“You almost need to be your own attorney to understand how to figure it out,” she added. “There’s a huge amount of confusion and misunderstanding about what needs to be included, and some students aren’t properly following the directions and are getting declined.”

But Linssen’s efforts paid off — she got $70,000 in private loans discharged in May.

“I will never fully recover from what happened to me. When I left Brooks, I was in so much debt that I didn’t want to get married. I was in deep humiliation and shame at the decisions that I had made that put me in so much debt,” she said.

PPSL encourages borrowers who are denied relief through Navient to continue filing complaints with the CFPB. Connor also emphasized the importance of strengthening consumer protection laws not just for Navient but for the private lending industry as a whole, given that there are “different rules when talking about the federal government versus a private actor.”

Linssen can now finally start to see a future that doesn’t include any student debt.

“I am only just now in the place where I can finally breathe again and start feeling like a normal human being and start planning for the future,” she said. “I have that tiny, tiny spotlight of hope at the end of a really long tunnel that I may be able to retire or have a life again.”

While Nave also eventually got her private loans relieved after filing complaints with the CFPB, she doesn’t understand why it has to be this way.

“It feels like I’m trying to prove to them something they already know,” Nave said. “It took me seven hours to fill out, and it’s very confusing, so many students are afraid of answering these questions because they’re not exactly sure what is being asked.”

On June 14, Nave was shocked to see her efforts paid off — Navient effectively discharged her remaining balance after over a decade of payments.

Nick Eucker, 38, hasn’t been so lucky. Eucker attended the Brooks Institute and graduated with a bachelor’s degree in commercial photography in 2008. While he was fortunate to find employment in the field, he wasn’t making as much as he was promised — so he struggled to manage his student-loan payments while also juggling rent and other basic necessities, calling it “a huge financial burden.'”

As has been the case with many other borrowers, Eucker received a school misconduct discharge application after filing a complaint with the CFPB. He submitted his application — over 200 pages — to Navient in early May, and in June, he received a denial. The reason was the exact same as the one Pucci received: “You do not meet the requirements for discharge based on misconduct by your school.”

While Navient said it’s committed to ensuring all borrowers who qualify for relief receive it, it did not comment on the specific criteria it uses to evaluate borrowers’ applications — rather saying that it will continue to evaluate and update the process as it makes sense. But it’s leaving borrowers like Eucker and Pucci without any information on how to proceed, keeping them saddled with debt they’re struggling to afford.

“You get your hopes up, and it seems like this program might actually work. But then I got that letter that said I didn’t qualify, and it ruined my entire day,” Eucker said. “It’s this big letdown, once again.”