85,000 More Ripped-Off Corinthian Students Can Dump Their Loans

Thursday, November 19, 2015

California and federal officials completed the formality of finding that bankrupt Santa Ana-based Corinthian Colleges grossly lied about graduation rates, clearing the way for expedited loan forgiveness to 85,000 more former students. They could have been held liable for a raft of offenses.

Most of the students, attendees at Corinthian schools between 2010 and 2013, were in California at Everest College and WyoTech. Earlier in the year, 40,000 students at other Corinthian schools received debt relief. Corinthian shut down the last of its campuses in April, just after the U.S. Department of Education fined it $30 million for misrepresenting its programs.

“Corinthian preyed on vulnerable students who are now buried under mountains of student debt,” California Attorney General Kamala Harris said. “Today’s joint investigation findings will expand the pool of Corinthian students eligible for streamlined student loan relief options.”

The report that cleared the path for students was released jointly with the Education Department. In a press release, Harris thanked the federal agency for “joining my office to keep Corinthian accountable” and Education Secretary Arne Duncan returned the compliment by commending the attorney general and her team “for their collaboration in the effort to help defrauded Corinthian students.”

Harris and Duncan used Corinthian lies about graduation rates, which had already been part of legal proceedings, to establish the findings that students can use to get loan relief when their schools violate state law. One Everest campus in San Bernardino said 100% of its students found work, five times the real rate, according to the Sacramento Bee.

For-profit colleges like Corinthian are part of a $30-billion-year industry that draws around 90% of its revenue from federal and state grants and loans. Their behavior has been well known in education circles and beyond for some time. The schools came under scrutiny of late as their widespread rapacious behavior―recruiting any person with a pulse and access to government loan money―received more publicity.

A scathing U.S. Senate report (pdf) in 2012 detailed how predatory schools with high dropout rates and questionable programs target non-traditional low-income students, including veterans, who pile up loads of debt and have nothing to show for it.      

The for-profit industry has taken some shots of late. Education Management Corporation (EDMC), the second-largest for-profit education company in the nation, coughed up $95.5 million for “operating essentially as a recruitment mill” earlier in the week. Around 80,000 former students, 5,000 from California, are eligible for debt relief that could top $100 million.

The feds have filed two federal lawsuits against ITT Educational Services, and the University of Phoenix was told to stop recruiting on military bases, at least temporarily.

Linda Stamato, faculty fellow at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, took the occasion of the Corinthian student bailout to acknowledge those who made this moment possible.  

“Let us pause to thank the enablers in and out of Congress for their contributions to this fiasco,” Stamato wrote in an op-ed for the New Jersey Star-Ledger. “They ran interference to block regulations that would have protected students and taxpayers.”

Among her list of contributors is former President Bill Clinton, “who ‘served’ for five years as honorary chancellor of Laureate Education, the world's largest for-profit chain of colleges, 84 at last count, many in the developing world.”

Failed Republican presidential nominee Mitt Romney gave some love to the for-profit model, “perhaps influenced by more than a half million dollars contributed by Full Sail University.” General Colin Powell advised Leed Equity Partners, a private equity firm that owns a stake in EDMC. Self-styled populist John Hightower gave a shout-out in his newsletter to the celebrities who donated their time to the cause:

“Ubiquitous, self-promoting financial ‘expert,’ Suze Orman, has been on the payroll of the giant University of Phoenix for-profit chain, promoting its educational rip-offs on Capitol Hill and online. Comedian and TV host Steve Harvey has hyped Strayer University in TV ads. And U of Phoenix also sponsored an uplifting TV special by Al Sharpton―the MSNBC host subsequently ran a segment about the school that was panned by critics as ‘an infomercial.’ ”

–Ken Broder


To Learn More:

Sacramento-Area Corinthian Colleges Sometimes Doubled Job Claims, Report Says (by Jim Miller and Jeremy B. White, Sacramento Bee)

85,000 Additional Corinthian Students to Get Fast-Track Debt Relief (by Chris Kirkham, Los Angeles Times)

The Predatory for-Profit College Industry and Its Enablers in Congress (by Linda Stamato, New Jersey Star-Ledger op-ed)

For-Profit Colleges Get Rich by Sinking Students into Debt—and Their Scam Is Financed by Our Tax Dollars (by Jim Hightower, Hightower Lowdown)

Expanded Debt Relief Options for Corinthian College Students (California Attorney General’s Office)

Brown Vetoes Bill to Help Students Ripped Off by Shuttered Corinthian Colleges (by Ken Broder, AllGov California)

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