Students who attended colleges at Everest, Heald and Wyotech — part of the for-profit college chain Corinthian Colleges — were granted debt relief to the tune of $171 million this week.
On Wednesday, the Department of Education announced it has granted relief to 11,173 students from those schools who owed $15,280 on average, most of whom live in California. The department plans to work with attorneys general who may contact Corinthian Colleges students eligible for borrower defense to repayment and is testing out whether social media is an effective way to reach out to them.
Corinthian is one of the worst actors in the for-profit college industry. Last May, it was fined $30 million from the U.S. Department of Education for misleading job placement claims. And that wasn’t the only dodgy practice the chain was investigated for. Recently unsealed documents show the chain’s recruiters were also paid by how many students they convinced to attend the school.
After the rest of Corinthian’s campuses shut down, that still left the not-so-small matter of figuring out how to help the students who were scammed by the chain. Many for-profit college students are already economically disadvantaged before attending these schools — so as their student debt piles on and they’re unable to find an employer who respects their degree, they may be even worse off than they were before enrolling.
Corinthian Colleges’ Accreditor May Lose Ability to Provide AccreditationEducation CREDIT: Christine Armario, aAP The college accreditor responsible for providing accreditation to Corinthian…thinkprogress.orgThe department is working on helping other students who attended other for-profit colleges, but it’s happening slowly. The department is currently moving toward creating a process for borrower defense to repayment, which would allow borrowers to seek relief if their institution of higher education violated the law. The final version of this rule is expected to be released to the public in November and would become effective next summer.
Under the rule as it’s currently drafted, borrowers need to prove their college violated state law in order to be eligible for discharge of any of their loans. In order to be successful, those students would want to document violations of consumer law by focusing on things like job placement rates instead of sexual harassment, for example, as U.S. News explains.
The rule would also create a process for group-wide loan discharges, which would allow the department to grant discharges to students who attended a college that violated state law without receiving individual claims from each student. That’s an important victory for student debt activists, who have fought for “blanket discharge” of student loans for years.
Students who have attended other for-profit colleges that belonged to companies such as EDMC, which owns the Art Institutes, or ITT Educational Services, Inc, which owns the ITT Technical Institutes, still hope to achieve debt forgiveness. ITT Tech is under state and federal investigations. Out of fear it may close under these investigations, the Department of Education has ordered the parent company to increase its cash reserves. EDMC, which announced it would shut down many of its AI campuses last year, reached settlements with no admission to wrongdoing with several state attorneys general and the U.S. Department of Justice last year.