Corinthian College Students Get Student Loan Debt Relief

(Photo: Jose Luis Magana, AP)

(Photo: Jose Luis Magana, AP)

Scores of students who were defrauded by Corinthian Colleges, the now-defunct for-profit education provider that oversaw hundreds of campuses across the country, will have their student loans forgiven, the US Department of Education has announced.

The Education Department investigated more than 100 cases of alleged fraud by Corinthian College. Students who attended 91 different Corinthian schools across 20 states will be eligible to have their loans forgiven. According to Lauren Camera of US News, the Education Department has approved loan absolutions for more than 8,800 former Corinthian students, totaling more than $130 million. Now, about 250,000 students will have an opportunity to apply for federal loan forgiveness.

"When Americans invest their time, money, and effort to gain new skills, they have a right to expect they'll get an education that leads to a better life for them and their families," Secretary of Education John King said. "Corinthian was more worried about profits than about students' lives."

Findings revealed that Corinthian was dishonest about graduates' job placement rates, advertised degrees that it did not offer, and misled students about its credit transfer policies.

The Education Department first launched a financial oversight of Corinthian College in 2014. It slapped the giant for-profit vendor with a $30 million fine last April for its fraudulent job placement rates. Then, in that same year, Corinthian College filed for bankruptcies and closed its remaining campuses.

A decision by the Superior Court Judge in San Francisco, Curtis Karnow, spurred the Education Department's announcement. The Los Angeles Times reports that Judge Karnow officially ruled that Corinthian College had misled students, used unlawful debt-collection practices and violated the law.

Many advocacy groups have criticized the Education Department for acting too slowly on behalf of students. A reporter for The Washington Post, Danielle Douglas-Gabriel, notes that critics are demanding that the Department stop sifting through thousands of individual claims and instead administer collective debt relief.

"The pace of relief for wronged Corinthian students … remains for too slow, and its scope frustratingly narrow," says Alexis Goldstein, a senior policy analyst at Americans for Financial Reform. "With each passing day, more evidence accumulates that the illegal acts the department and others documented in their Corinthian enforcement actions were endemic throughout the entire chain. But nonetheless, interest is still accumulating on the federal student loans held by hundreds of thousands of former Corinthian students who have not yet received relief."

Nevertheless, the Department's announcement comes at a time when for-profit educational institutions are under heightened scrutiny. Policymakers have found that for-profit institutions often will finagle their job placement rates or their statistics on graduates' career earnings to increase their enrollment rates. Secretary King's department has created the Student Aid Enforcement Unit as a means to respond more quickly to allegations of illegal or duplicitous actions committed by institutions of higher learning.

"We will continue to take action to protect students and taxpayers from unscrupulous companies trying to profit off of students who simply want to better their lives."

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