New York Times
By Emily S. Rueb
The debt collectors call so often that Amarilis Madera knows them by name. For years, they have threatened to take her possessions and drain her bank account. In February, her $5,000 tax refund was seized.
“I needed that money to live,” Ms. Madera, 49, a mother of three, said recently through a translator. “I almost lost my apartment.”
Her financial burden was caused not by reckless spending, but by a decision she made more than 17 years ago and deeply regrets: enrolling at the Jon Louis School of Beauty in the Bronx.
The school promised a steady career and a way out from the factories where she had worked since arriving from the Dominican Republic.
But it was a sham.
Instead of receiving a scholarship, basic training and job placement, Ms. Madera struggled to gain a footing into the beauty industry and eventually fell into a financial morass that she has been unable to escape.
Hundreds of women in New York City, and maybe more, are in similar straits because they attended cosmetology schools like Jon Louis, the Wilfred Academy of Hair and Beauty Culture, and Robert Fiance Hair Design in the 1980s and 1990s.
“It would have been worth it for a school that gave me a future,” said Ms. Madera, who makes about $25,000 a year working at a day care center in the Bronx.
All three schools have been closed for years after accusations and indictments that they misused federal student loan money.
“The proprietors of these schools retained the profit from taxpayer dollars, but these individuals are the ones left holding the bag,” said Eileen Connor, a lawyer with the New York Legal Assistance Group, a nonprofit organization that is representing dozens of women who attended these schools.
In 1990, Maria Machado, 49, signed up for Wilfred Academy in Jamaica, Queens, because it promoted itself in the Hispanic community as a place where single mothers could begin a lucrative career.
Wilfred Academy, one of the nation’s oldest and largest trade school franchises with several branches in New York, put up posters near welfare offices, at bus stops and in subway stations. It ran television advertisements featuring three perky women in a salon singing into curling irons, “It’s a beautiful life when you love what you do!”
The company went out of business in the early 1990s after it was found guilty of falsifying applications for federal student loans and misusing federal loan money.
The day Ms. Machado enrolled in 1990, a well-manicured woman in heels ushered her upstairs to fill out paperwork, telling her not to worry about the cost. Ms. Machado did not speak English, and had completed only the sixth grade in El Salvador.
“I wanted a better future for my kids,” Ms. Machado said. “I trusted them.”
Ms. Machado said the school did not prepare her for the state’s licensing exam, and like many of her peers, she never passed it, eventually abandoning her beauty career after a brief stint washing hair and emptying the trash at a salon.
It was not until several years later, when the government seized her tax refunds after she applied for citizenship, that she discovered she was several thousand dollars in debt.
In February, Ms. Machado saw a news segment on Univision, the Spanish-language television network, about a woman whose $50,000 debt for the Wilfred academy was erased.
That led her and other women to connect with the New York Legal Assistance Group, which has sent letters to the United States Department of Education on their behalf, requesting refunds, restoration of credit and immediate discharge of the debt.
The legal group is basing its requests on the so-called false-certification discharge, a provision on student loans that allows forgiveness for loans disbursed after January 1986 if it can be proved that the schools falsely certified that the students without high school diplomas or G.E.D.’s could benefit from the courses.
Ms. Connor, the lawyer for the legal group, said the Education Department should take “proactive and common-sense” steps to contact all debtors who may be eligible for discharge because it was aware that the schools were fraudulent.
“They have this information, which they use for collection, but when it comes time to educate debtors, they don’t,” Ms. Connor said.
Last month, after receiving calls about the loans from The New York Times, the Education Department agreed to discharge 17 loans for Wilfred graduates and is considering two discharge applications for Jon Louis graduates.
Stephen Spector, a spokesman for the department, said in an e-mail that the department was “responding to requests for loan forgiveness and will continue to work with borrowers on this matter.”
It is not clear how many loans are outstanding, but the state’s guarantee agency has approved a total of 35,726 loans for 10 Wilfred, Robert Fiance and Jon Louis locations in New York City since Jan. 1, 1986, according to state data. A majority of loans are no longer active, but an analysis of data from other agencies servicing loans from these schools suggests that several hundred are still on the books. Herman De Jesus, a senior program associate for the New Economy Project, an advocacy organization, said that though the three beauty schools had long been closed, other trade schools continued to prey on students.
“Schools are targeting low-income people and people of color for the sole purpose of drawing down large sums of federal aid dollars,” Mr. De Jesus said. The schools “have no intention of providing them with a quality education.”
But unlike mortgages and credit card debt, federal student loans are difficult to relieve, and there is no statute of limitations on their collection.
“It follows you for the rest of your life,” he said.
On a recent afternoon, Danubia Tejada, 47, sat at the kitchen table in her Bronx apartment and picked up a photo taken at the Wilfred Academy in 1987.
Ms. Tejada shook her head when she glanced at her younger self with a thicket of curly bangs under a blue square cap and satin gown, her inch-long, fire-engine-red fingernails gingerly cradling a bouquet of red roses. The school charged $300 for the portraits, she recalled.
She put a hand over her heart when she described her job, working nights at a group home for developmentally disabled residents, which she said pays about $34,000 a year.
But every month, she withdraws $140 to pay down a loan that has ruined her credit. A few years ago, when she fell behind on payments, her account was labeled “delinquent,” which she said made her feel like a criminal.
“But I’m not,” she said. “I’m trying to pay.”
This month, Ms. Tejada got a phone call from the New York Legal Assistance Group informing her that her application for a false-certification discharge was approved.
But it may be weeks or months before she has a check in hand from the government, reimbursing her for the thousands of dollars she has paid for the loan and fees.
Ms. Tejada already has plans to help her oldest daughter pay for a college degree in social work.
“I can do a lot of things with that money,” she said.
Jack Styczynski contributed research.