Education Department could repay students scammed by for-profit schools

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Students who were scammed by a for-profit college back in the '80s could get their money back under the Trump administration.

The Wilfred American Education Corp. used to run beauty and secretarial schools that primarily attracted low-income students, usually women.

In 1988, Wilfred had 58 schools and more than 11,000 students, making it one of the largest for-profit college chains in the country.

Related: See images from protests against student loan debt

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NEW YORK, NY - NOVEMBER 13: Students hold placards as they stage a demonstration at the Hunter College, which is a part of New York City University, to protest ballooning student loan debt for higher education and rally for tuition-free public colleges in New York on November 13, 2015. (Photo by Cem Ozdel/Anadolu Agency/Getty Images)
NEW YORK, NY - NOVEMBER 13: Students hold placards as they stage a demonstration at the Hunter College, which is a part of New York City University, to protest ballooning student loan debt for higher education and rally for tuition-free public colleges in New York on November 13, 2015. (Photo by Cem Ozdel/Anadolu Agency/Getty Images)
LOS ANGELES, CA - SEPTEMBER 22: Students protest the rising costs of student loans for higher education on Hollywood Boulevard on September 22, 2012 in the Hollywood section of Los Angeles, California. Citing bank bailouts, the protesters called for student debt cancelations. (Photo by David McNew/Getty Images)
LOS ANGELES, CA - SEPTEMBER 22: A woman holds a placard on Hollywood Boulevard while protesting the rising costs of student loans for higher education on September 22, 2012 in the Hollywood section of Los Angeles, California. Citing bank bailouts, the protesters called for student debt cancelations. (Photo by David McNew/Getty Images)
NEW YORK, NY - NOVEMBER 13: Students hold placards as they stage a demonstration at the Hunter College, which is a part of New York City University, to protest ballooning student loan debt for higher education and rally for tuition-free public colleges in New York on November 13, 2015. (Photo by Cem Ozdel/Anadolu Agency/Getty Images)
LOS ANGELES, CA - SEPTEMBER 22: Students protest the rising costs of student loans for higher education on Hollywood Boulevard on September 22, 2012 in the Hollywood section of Los Angeles, California. Citing bank bailouts, the protesters called for student debt cancelations. (Photo by David McNew/Getty Images)
NEW YORK, NY - NOVEMBER 13: Students hold placards as they stage a demonstration at the Hunter College, which is a part of New York City University, to protest ballooning student loan debt for higher education and rally for tuition-free public colleges in New York on November 13, 2015. (Photo by Cem Ozdel/Anadolu Agency/Getty Images)
NEW YORK, NY - NOVEMBER 13: Students stage a demonstration at the Hunter College, which is a part of New York City University, to protest ballooning student loan debt for higher education and rally for tuition-free public colleges in New York on November 13, 2015. (Photo by Cem Ozdel/Anadolu Agency/Getty Images)
LOS ANGELES, CA - SEPTEMBER 22: Students protest the rising costs of student loans for higher education on Hollywood Boulevard on September 22, 2012 in the Hollywood section of Los Angeles, California. Citing bank bailouts, the protesters called for student debt cancelations. (Photo by David McNew/Getty Images)
LOS ANGELES, CA - SEPTEMBER 22: Students protest the rising costs of student loans for higher education on Hollywood Boulevard on September 22, 2012 in the Hollywood section of Los Angeles, California. Citing bank bailouts, the protesters called for student debt cancelations. (Photo by David McNew/Getty Images)
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Many of those students used federal loans to pay for their education. But in 1991, Wilfred was found guilty of fraud in two different federal court cases.

By law, the Department of Education should have canceled the student loans after the school was shut down. That didn't happen.

Seven former Wilfred students sued President Obama's Education Department, demanding their student debt be canceled and the loan payments they made over the years be reimbursed. They were among 60,000 people who took out government-backed loans to go to Wilfred.

SEE MORE: Trump University Cases Settled For $25 Million

That lawsuit was originally dismissed on a technicality. The decision was overturned when a judge said the Education Department was required to tell students if they're eligible to cancel a loan.

Now, four people familiar with the case told Bloomberg the federal government is considering a deal. It would allow students to petition to cancel their debt and get refunds on past payments.

The outlet notes a lawyer for the students said in a March 9 filing that they "have made substantial progress toward a final settlement," but no official agreement has been submitted to the court yet.

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