New evidence that Corinthian Colleges widely misrepresented job placement rates at its Everest and Wyotech schools could make it easier for thousands of former students to have their federal student loans forgiven.
“Corinthian preyed on vulnerable students who are now buried under mountains of student debt,” said California Attorney General Kamala Harris. The “findings will expand the pool of Corinthian students eligible for streamlined student loan relief, helping them rebuild their lives and pursue a brighter future.”
The Department of Education said Tuesday that findings from a joint investigation with Harris prove that the for-profit chain lied about the number of students at campuses in California and Florida who landed jobs. The findings mirrors those at the heart of a $30 million fine the department levied against Corinthian in April for falsifying job rates at Heald Colleges in California, Hawaii and Oregon.
Students at those Heald schools seeking loan forgiveness in the wake of Corinthian’s demise can have their claims grouped together to speed the process. Now roughly 85,000 Wyotech and Everest students will have the same opportunity.
Department officials said the new findings will be turned over to an independent monitor, Joseph A. Smith, who has asked state attorneys general to submit evidence so claims from their states can be grouped together.
“Helping wronged students is much easier when everyone – Congress, state attorneys general, accreditors, authorizers and the department – does their part to protect students and works together,” Education Secretary Arne Duncan said in a statement. “Our team welcomes help from anyone who wants to follow [the attorney general’s] lead.”
Harris’ office found a Corinthian marketing plan that said its ideal students were “isolated, impatient people with low self-esteem and few people in their lives who care about them, and who are stuck and unable to see and plan well for their future.” The target population included single mothers, veterans and people with low incomes, who were lured by promises of jobs that Corinthian never delivered.
Along with eight other state attorneys general, Harris urged the Department of Education in June to forgive the federal debt amassed by Corinthian students because the school broke the law. Her investigation of the Heald schools in California ultimately led the department to offer broad loan forgiveness to those students. Corinthian students have borrowed about $3.2 billion in federal loans since 2010.
“These students held up their end of the bargain,” said Harris on a call with reporters Tuesday. “They worked hard, they paid for school and took on debt, making sacrifices believing they were doing the right thing. The least we could do now is give them the relief they deserve.”
The department has faced criticism from lawmakers and advocacy groups for its handling of the collapse of the for-profit chain that ran Everest, WyoTech and Heald Colleges. Many say it is taking too long for the government to clear the debts of former students of a chain toppled by evidence of pervasive fraud. While critics are demanding collective debt relief, the government is sorting through thousands of individual claims.
Students can by law apply to have their federal loans discharged if they can prove a school used illegal or deceptive tactics in violation of state law to persuade them to borrow money for college. The process, known as a “defense to repayment claim,” has rarely been used and is widely considered to be difficult to navigate.
“This is rather uncharted territory for the department,” said Under Secretary Ted Mitchell, on Tuesday’s call. “We want to make sure that we have a process that is as fair, transparent, efficient and durable as possible.”
Although the department appointed Smith to streamline the operation, he has estimated that it could take several months to get through claims, even the ones from Heald. Given Smith’s call for state evidence, students in the 20 states, including Massachusetts and Illinois, that are investigating or suing Corinthian may have an easier time proving their case. Mitchell said the department is still investigating whether the inflated placement rates were rampant throughout the for-profit chain.
Charges that Corinthian lied about the success of its programs ultimately led to the loss of its access to federal funding and its bankruptcy. The company’s implosion left thousands of students unsure of what to do with their debt or even where to complete their educations.
In June, the administration said that anyone who had attended a Corinthian school as of June 20, 2014, could apply for what’s known as a closed-school discharge of their federal loans. All other students were invited to file a claim if they could prove they were defrauded by their colleges.
Mitchell said the department has received 10,100 of closed-school claims as of Nov. 4, and resolved nearly 5,300 involving $70 million in federal student loans. Another 6,400 students have submitted defense claims to date, but none have been granted relief. The department hired four attorneys in late August to review and analyze state laws involved those claims.
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