Dear Commons Community,
With help from anti-debt activists, the fifteen Corinthian College students are challenging the U.S. Department of Education and Arnie Duncan over lackluster supervision of the chain of for-profit colleges. In refusing to make payments, the group alleges the Department allowed Corinthian to lure students into taking out loans backed by taxpayers that were used to pay a company that lied about the quality of education students would receive. As reported in The Huffington Post:
“Corinthian, once one of the nation’s largest for-profit college chains with more than 110,000 students, is effectively shutting down under the weight of numerous state and federal probes that allege it cheated students by lying to them about job placement and graduation rates. Though the chain has previously disputed allegations from state and federal authorities that it defrauded students, it recently sold more than 50 campuses under pressure from the U.S. Department of Education, and Canadian authorities last week forced another 14 into bankruptcy.
A contingent of former students, backed by prominent student advocates, the Massachusetts attorney general and more than a dozen Senate Democrats, has demanded the Education Department forgive federal student loans that thousands of people took out to attend Corinthian’s schools. The department has the authority to cancel loans in instances where students demonstrate that schools defrauded them. Lawyers from the Department of Justice have argued that Education Secretary Arne Duncan has “complete discretion” when it comes to canceling loans for all students at a particular institution if he determines it defrauded students, even absent a formal application from individual borrowers…
Experts in higher education have previously assailed the Education Department for its spotty track record in protecting students from unscrupulous colleges. Some have said the department views colleges as its partners, rather than as regulated entities. Others have said the department puts the needs of colleges over those of students.
After a multi-year investigation, the Consumer Financial Protection Bureau, the federal agency charged with protecting borrowers from unscrupulous lenders, accused Corinthian in September of inflating its job placement rates by creating fake companies, defining a “career” as a job that lasted one day with the promise of a second, and by paying employers to temporarily hire its graduates.”
This is a sad state of affairs and one that could have been avoided if the U.S. Department of Education had done more to regulate digital diploma mills such as Corinthian. Unfortunately, the for-profit college industry has provided substantial sums of money for lobbyists in Washington, D.C. and have a good deal of influence among many of our politicians.