Mar 18, 2003
School closings put many in debt
Some who fought had loans dropped
BY GORDON HICKEY
TIMES-DISPATCH STAFF WRITER
Mike Cuccherini wanted to change his life, and he did.
It has gotten worse.
Cuccherini is one of the thousands of people across the country who got caught when the computer-school craze faded.
The school he borrowed $11,000 to attend, Solid Computer Decisions, closed after he attended fewer than half of the eight classes he paid for.
The school he was sent to for the rest of his classes, AmeriTrain, closed before even the first class was finished. The school he was supposed to attend to finish the classes AmeriTrain didn't finish, ICT[S], closed the day he was supposed to start.
Wherever he went, doors were slammed in his face.
Then things got really ugly. The company that originated his loan, SLM Financial Corp., told him he had to pay it back. He didn't think that was right, because he didn't get the money or the education it was supposed to pay for.
He was surprised to read in recent weeks that SLM had forgiven loans for a number of Solid Computer Decisions students who, like Cuccherini, were locked out when the school closed.
Cuccherini cooperated with SLM. He agreed to the teachouts, which would have allowed him to finish the classes at another school, at AmeriTrain and ICT[S], which failed. He also signed an agreement binding him to arbitration, rather than court, to settle any disputes with SLM over the loan.
Other students, though, didn't play along. They fought SLM, some with lawyers and others with an onslaught of letters to officials.
Now, SLM has discharged a number of loans to students who fought. Those who went along with the program, such as Cuccherini, are still paying.
SLM did tell Cuccherini it was forgiving a portion of the loan but said he still owed $4,000, on the theory he should be required to pay for the classes he took.
But on Feb. 27 he received an e-mail from SLM telling him his Solid Computer Decisions loan had been tacked onto an earlier $17,000 loan he had taken out for classes at Strayer University. That loan was originated by Sallie Mae.
Sallie Mae provides federally guaranteed loans to students attending accredited schools. SLM, a spin-off of Sallie Mae, provides private loans that aren't federally backed.
The two aren't the same, and their loans can't be combined.
For people such as Cuccherini, the closing of Solid Computer Decisions and other schools has changed their dream of a new life into a nightmare of debt. Their disappointment is compounded by what they see as abuse by SLM.
Dale W. Pittman and Thomas D. Domonoske are among the few lawyers who have agreed to take on student cases. The Petersburg lawyers started out with three clients.
Domonoske said he and Pittman believe their clients could have had their loans discharged and also would have won punitive damages. But the clients "were willing to give up their claim [to punitive damages] if SLM did the right thing by other people," Domonoske said.
In the end, SLM discharged the loans for 86 students.
In all, SLM originated $21 million in loans to Solid Computer Decisions on behalf of about 2,000 students in 15 states, Domonoske said. The loans were paid in advance directly to the school, even though it was not licensed to operate in most of those states, including Virginia.
Domonoske said that SLM shouldn't even be asking those students for payment of the loans. The law is clear that "because the school isn't licensed, it's not allowed to ask for tuition," he said.
"Sallie Mae knows that the loans [to SCD] are absolutely unenforceable," Domonoske said.
Robert Lavin, a lawyer representing SLM, said he couldn't talk about specific cases or why some loans have been discharged and others haven't because "some matters are under litigation."
He pointed out that many of the students in Virginia have had loans discharged and in other cases "borrowers are only paying for the training they received."
But borrowers, such as Cuccherini, only went to Solid Computer Decisions because it was offering a job at the end of the training.
Martha Holler, a spokeswoman for SLM, said, "that's something completely between the school and the student." SLM provided loans for the classes, not for the jobs.
Cuccherini was also surprised when his SLM loan was tacked onto his Strayer loan. Holler said the loans can't be combined but the payments were put together for Cuccherini's convenience so that he would only have to make one monthly installment.
Cuccherini didn't find it convenient. He wasn't making any payments on his Strayer loan because he has a student deferment. When the SLM loan got tacked on, he was suddenly told he was arrears in both.
Gunther Pontes, 53, of Columbia, S.C., took early retirement after 20 years in his job at IBM. After a time, he decided he wanted a job in computers so he started looking at schools. "The one thing that really caught my eye, and in fact the only thing that was different . . . was their offer of employment," he said of SCD.
He decided to take the loan from SLM because "to me SLM is a federally funded loan. I found out after the fact that it isn't."
SLM required a cosigner for the loan, which Pontes found odd considering he had enough money to cover the loan and was in his 50s. But he got the cosigner anyway.
Less than halfway through the classes, SCD folded.
At that point, Pontes was out of money and he had lost his chance at a job. He filed for bankruptcy.
SLM has reduced his loan from the original $11,000 to $5,700, and "they are absolutely hounding my cosigner."
Pontes said he has contacted lawyers, newspapers, television stations. He has been referred to the governor's office, the attorney general's, his congressman and the police. "We haven't had anybody respond to anything."
Jim Cocke, 40, of Birmingham, Ala., signed up for nine classes at SCD because the company offered a job. He finished three classes. "The next thing we knew the door was locked."
SLM arranged a teachout for Cocke at a local university. He called it a brief overview. "I didn't feel the classes adequately prepared you for the tests" needed for certification as a Microsoft Certified Technician.
Today, Cocke is paying $161 a month to pay off his loan from SLM.
The man who found Pittman and originated the court case against SLM was Chris Barnes, a 46-year-old Midlothian resident. He had completed three of eight classes when SCD closed.
Unlike hundreds of other SCD students in 15 states, Barnes didn't agree to take the teachout SLM was offering. He also refused to go along with an agreement that would bind him to arbitration and forbid him from going to court to contest his loan payments.
Instead, Barnes found a lawyer and fought SLM. He won.
"It's really sad," Barnes said of Sallie Mae. "They have $80 billion in loans outstanding. They're huge."
Vanessa England, of Jacksonville, Fla, also fought, but she took a different route. She peppered elected and law-enforcement officials with mail.
This month, SLM told her it was forgiving her loan "due to special circumstances."
Her loan was for $14,000 and she attended one class, which was never completed.
"They [SLM] asked me to please stop making contact with senators and congressmen," England said. SLM had one other request, she said in a phone interview: "Please don't go public with my story."
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