The National Student Legal Defense Network, citing data obtained over the last two years from the Freedom of Information Act requests, found that these institutions owe money to the department as of February.
The nonprofit organization noted that the department has neglected to apply the same amount of aggressive pressure to colleges and their owners as what is applied to student loan borrowers.
“While the Department aggressively attempts to collect from borrowers, institutions and their owners and executives walked away from more than a billion dollars owed to taxpayers,” the report said.
The report continues, “Meanwhile, the Department’s use of preventative measures to protect taxpayer interests—such as enhanced financial monitoring and requiring institutions to post sureties to guard against losses—have proven ineffective at preventing harm to students and taxpayers alike.”
Dan Zibel, the organization’s chief counsel and one of the authors of the report, told CNBC that the unbalanced treatment from the department between student loan borrowers and colleges is “grossly unequal.”
“The department continues to spend a lot of time, energy and money on its collection systems from student borrowers,” Zibel said. “Yet there is nothing happening to collect debt from institutions, owners and executives of for-profit colleges. That sort of disparity in the way the department treats them is grossly unequal.”
The group also found that the incident cost the department at least $218 million as a result of the department’s failure to gather the owed debt from the colleges.
Department of Education press secretary Kelly Leon told CNBC that the agency is “committed to improving our policies and practices to better hold colleges accountable for their actions and to provide borrowers with fair and streamlined access to the benefits to which they are entitled.”
“We hope that the department will do everything in its power to protect students and borrowers, and that means holding bad actors to account and rethinking how it treats struggling student loan borrowers,” Zibel added.
Rachel Bucchino is a reporter at the National Interest. Her work has appeared in The Washington Post, U.S. News & World Report and The Hill.