After a protracted battle with a lender, Prince William County Supervisor and Republican congressional candidate Yesli Vega paid off her student loans to a shuttered for-profit college that the federal government said defrauded hundreds of thousands of students.
The student loans were not discharged through a 2009 bankruptcy filing, Vega told InsideNoVa. She provided documentation to support her statements.
The 7th District GOP candidate spoke to InsideNoVa Tuesday after reports last week that she had nearly $46,000 in student loans discharged through the bankruptcy filing. The reports noted that Vega has consistently criticized President Joe Biden’s student loan forgiveness plan.
The Biden administration’s plan would allow most people with federal student debt to apply for up to $10,000 in forgiveness. Recipients of the Pell Grant, for low-income undergraduate students, could receive up to $20,000 in forgiveness.
After the plan was announced, Vega said it was “a taxpayer-funded government handout” and requires “hard-working Americans” to shoulder the burden for “the most wealthy among us who hold a majority of the debt.”
Vega later posted on social media that the proposal was “an election year campaign trick funded by you, the taxpayers. It’s unfair to the millions of us that paid off our debt or skipped college to get an early jump into the workforce. Hardworking Virginians shouldn’t have to foot the bill for someone else’s college degree, so that Abigail [Spanberger] can try to buy your vote.”
Spanberger is Vega’s Democratic opponent in the 7th District race.
Vega and her husband, Rene, did file for bankruptcy in 2009 while living in Fort Washington, Md., which is across the Potomac River from the Alexandria area.
At the time, Vega had a 1-year-old daughter and 3-month-old son and had just started as a receptionist in Springfield. Her husband was a Prince William County firefighter, according to the filing.
Vega said bankruptcy filings require petitioners to list all debt regardless of whether it can be forgiven through the courts, which is why the student loans are listed.
After October 2005, changes to federal bankruptcy law made it extremely difficult for petitioners to wipe out student loan debt through courts by requiring them to show that the loan payments created an “undue hardship” to receive relief, according to the American Bar Association.
Vega’s bankruptcy filing indicated more than $96,000 in debt at the time, including $45,587 in student loan debt plus $1,280 owed to the for-profit Corinthian Colleges Inc.
Other outstanding debts in the filing were:
More than $17,000 in credit card debt
$1,500 in Virginia state taxes
$1,105 in Maryland income taxes
$3,879 in medical debts
Vega said she received an associates degree from Everest College in Tysons, which was owned by Corinthian Colleges. Throughout the 2010s, the for-profit company came under fire with allegations that it misled students, including about how their credits would transfer to other schools and its accreditation status.
The U.S. Department of Education concluded in 2015 that Corinthian engaged in “widespread and pervasive” misrepresentations related to a student loan borrowers’ employment prospects, including guarantees they would find a job. The department also said the company made “pervasive misstatements to prospective students about the ability to transfer credits and falsified their public job placement rates.”
In June, the education department announced it would forgive $5.6 billion in federal loans for 560,000 students who attended any of Corinthian’s colleges.
Vega’s loans were through Sallie Mae, which she said worked with Everest College and provided an agreement that she would not have to repay loans until after graduation.
Vega said the company started asking for payments plus interest and fees before her graduation. She said that, plus other financial hardships from the recession that started in 2008, led to her filing for bankruptcy.
Vega said her student loans were not wiped out in the bankruptcy proceedings. After receiving relief, she negotiated with Sallie Mae until 2014 when the company agreed to eliminate interest and fees and seek repayment only for the original amount borrowed.
Vega provided InsideNoVa with signed letters from the company detailing the agreement.
After reaching the settlement, Vega said she emptied her savings to pay off her balance.
Vega said her problem with Biden’s plan has been that it doesn’t address the root causes of ballooning student loan debt. She said tuition costs are skyrocketing and students are required to borrow large amounts at high interest rates that saddle them with debt for years.
Vega said loan forgiveness is a temporary solution and the government should instead be making college more affordable and protecting students from predatory loan practices.
The hotly contested 7th District race carries national significance as it could be pivotal in determining control of the U.S. House of Representatives, currently held by a slim Democratic majority.