Corinthian College Students Ask Dept of Ed for Loan Forgiveness


Students from the for-profit Corinthian Colleges are seeking to have their federal loans forgiven amid the closing of the school, and are receiving help from state attorneys general and US senators in their efforts.

However, paying off the debts of all former Corinthian students could result in a loss of billions for the federal government.  If the government chooses to help them in any way, the doors would then be opened to any other former for-profit students to receive the same help.

For-profit educational institution Corinthian Colleges agreed to close its doors or sell its campuses amid pressure from the Education Department after facing allegations of fraud last summer.  The institution was one of the largest for-profit colleges in the nation with around 72,000 students enrolled.

According to the Education Department, the college did not offer adequate paperwork, nor did they comply with requests for explanations concerning the company’s practices such as falsifying job placement data for graduates, in addition to altering grades and attendance records.

In the final years of the school’s operation, students received a total of $1.2 billion per year in federal loans.  Adding in the additional time it takes to pay off those loans could increase that number by additional billions, causing the department to need to look at what the total cost would be more closely.

Thirteen U.S. senators led by Sen. Elizabeth Warren, D-Massachusetts, have asked the department to “put teeth into its existing legal authority” to forgive the debt. Nine state attorneys general added to the pressure in a Thursday letter that declared “Corinthian took advantage of students who were trying to build a better life for themselves and their families.”

The attorneys general are asking the department to use a federal law which states borrowers can cite misconduct within a college as reason to not have to repay their loans, writes Michael Stratford for Inside Higher Ed.

Education Department undersecretary Ted Mitchell said their options are currently being weighed in an effort “to do what is right and fair.”

Meanwhile, the company is accusing California Attorney General Kamala Harris of preventing the sale of their campuses in the state by requiring “unreasonable demands” of would-be buyers.  The company would also like her to reverse her previous decision to make any buyer liable for the state’s lawsuit against the company.

The company maintains control of the campuses while it looks for potential buyers.  However, if it is unable to sell in the next few weeks, they will be required by the US Department of Education to close all campuses in the state.