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Established Contributor
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Registered: ‎04-26-2012
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Embezzled student loans

I am asking this question for a friend so bear with me if I do not have all the I info.
Basically she went to beauty school where it Cost appx 15k, she received a check from the government and gave it to the school who in turn spent the money on something else but not her education. This happened to several girls too.
She then had to come up with the cash to pay for school but was still responsible to the government for the 15k.
She got a news station involved, complained to the government etc. all that happened to the owner if the school is that he could no longer take student loans checks only cash,
Well that was 1997, her loan has now inflated to 52k.
She did not take care if it when it could have mattered.
What, IF ANY, options does she even have??
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Registered: ‎09-25-2009
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Re: Embezzled student loans

This should have went to the BBB, US. Dept of Ed, FTC and Attorney General Office for whatever state this person is in.  The Attorney Generals Office acts on behalf of a group of people making the same complaints in regards to any consumer transaction.   I would suggest her to contact these other people who were also embezzled, and all go down there and make a complaint to the attorney generals office, they will investigate and subpoena records,  and hopefully it will be a class action suit.  The only thing is since it was 1997, statuate of limitations might depend on the state she lives in.  U.S Dept of ED and Attorney General is the last resort.  If they can't assist, then she will have to pay the loan.


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Posts: 1,192
Registered: ‎06-09-2008
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Re: Embezzled student loans

With this being so far in the past, I would start with the student loan ombudsman.  There are provisions for cancelling student loans if they are taken out fraudulently, and the fact that the school lost their ability to accept financial aid may have an impact as well.  The ombudsman should help you get oriented and consder options.  It might also be worthwhile to contact an attorney who is knowledgable in student loans.

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Posts: 1,115
Registered: ‎10-31-2011
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Re: Embezzled student loans


jadeite788 wrote:

This should have went to the BBB, US. Dept of Ed, FTC and Attorney General Office for whatever state this person is in.  The Attorney Generals Office acts on behalf of a group of people making the same complaints in regards to any consumer transaction.   I would suggest her to contact these other people who were also embezzled, and all go down there and make a complaint to the attorney generals office, they will investigate and subpoena records,  and hopefully it will be a class action suit.  The only thing is since it was 1997, statuate of limitations might depend on the state she lives in.  U.S Dept of ED and Attorney General is the last resort.  If they can't assist, then she will have to pay the loan.


I dont think Fed backed SLs have a SOL. Pretty sure the will follow you FOREVER!!

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