Can­cel all Corinthian stu­dent debt

Los Angeles Times - - OP - ED - By As­tra Tay­lor and Ann Lar­son n Fe­bru­ary, As­tra Tay­lor and Ann Lar­son are mem­bers of the Debt Col­lec­tive, which or­ga­nized the stu­dent debt strike against Corinthian Col­leges.

I15 stu­dents who had at­tended Corinthian Col­leges Inc. launched the na­tion’s first stu­dent debt strike. The stu­dents de­clared that they would no longer re­pay their loans on the grounds that Corinthian — a net­work of for- profit schools in­clud­ing Ever­est, Heald and Wy­oTech — had used fraud­u­lent mar­ket­ing and re­cruit­ment prac­tices and that the cred­its and de­grees they earned were worth­less. Soon the Corinthian 15 be­came the Corinthian 100, and the 200. Groups such as the Amer­i­can Fed­er­a­tion of Teach­ers and Jobs With Jus­tice en­dorsed their cause.

Corinthian filed for bank­ruptcy in May, and the Ed­u­ca­tion Depart­ment has now an­nounced a plan to can­cel the debt of some for­mer Corinthian stu­dents.

This is a sig­nif­i­cant vic­tory for the strik­ers. It shows that the tac­tic of debt re­fusal, when strate­gi­cally de­ployed, can get re­sults. But the depart­ment hasn’t done nearly as much as it could, or should, to set things right.

When Ed­u­ca­tion Sec­re­tary Arne Dun­can re­vealed the debt re­lief plan, he blasted schools such as Corinthian for bring­ing “the ethics of pay­day lend­ing into higher ed­u­ca­tion.” These schools, Dun­can said, “prey on the most vul­ner­a­ble stu­dents and leave them with debt that they too of­ten can’t re­pay.” In­deed, a third of Corinthian stu­dents came from fam­i­lies that earned less than $ 10,000 per year.

A close look at the fine print, how­ever, re­veals that Dun­can and his staff are pre­sent­ing a stop­gap mea­sure as a mean­ing­ful so­lu­tion. In­stead of is­su­ing a blan­ket dis­charge to all for­mer Corinthian stu­dents, the depart­ment of­fers a byzan­tine process that will likely leave out many stu­dents.

Most stu­dents will have to ap­ply in­di­vid­u­ally, and be re­quired to sub­mit tran­scripts and other doc­u­ments that may be hard to come by be­cause their cam­puses have shut down or been sold. They must also spell out what parts of a state law Corinthian vi­o­lated in their par­tic­u­lar case. These stu­dents are not lawyers, and they should not be re­quired to do the job of a fed­eral agency with a f leet of at­tor­neys on staff.

Stu­dents al­ready drown­ing in debt will soon find them­selves tied up in red tape, and that’s only if they know the re­lief pro­gram ex­ists . The Ed­u­ca­tion Depart­ment has an­nounced no plans to alert stu­dents about their op­tions, even though it ac­knowl­edged to the New York Times that in past cases of col­lege clo­sures, only 6% of stu­dents have typ­i­cally asked for debt can­cel­la­tion.

It’s clear from the long trail of al­le­ga­tions against Corinthian that it was a “bad ac­tor,” a term fed­eral of­fi­cials used in a meet­ing with strik­ers and or­ga­niz­ers. The state of Cal­i­for­nia has been in­ves­ti­gat­ing the com­pany since at least 2007, when a last- minute set­tle­ment stopped an im­pend­ing law­suit. Since then, dozens of state and fed­eral author­i­ties have in­ves­ti­gated Corinthian. The fed­eral Con­sumer Fi­nan­cial Pro­tec­tion Bureau sued the com­pany in 2014, ac­cus­ing it of op­er­at­ing a preda­tory lend­ing scheme.

But the Ed­u­ca­tion Depart­ment is largely to blame for the prob­lem of un­scrupu­lous, for­profit schools. For decades, the gov­ern­ment has funded bil­lions of dol­lars in grants, loans and GI Bill ben­e­fits to stu­dents at these in­sti­tu­tions. A 2012 Se­nate Com­mit­tee found that 86% of the rev­enue at 15 of these pub­licly traded schools came from taxpayers. Corinthian alone got $ 1.4 bil­lion a year — much of which f lowed to con­ser­va­tive think tanks and public re­la­tions firms, ac­cord­ing to in­ves­tiga­tive re­porter Lee Fang.

In 2014, the Ed­u­ca­tion Depart­ment ac­cused Ever­est Col­lege of ly­ing to stu­dents about job place­ment rates and briefly cut off fed­eral fund­ing to Corinthian. Af­ter the com­pany said it could not sur­vive even a few weeks with­out the public money, the Ed­u­ca­tion Depart­ment con­tin­ued fund­ing Corinthian while the net­work sought a buyer.

The Ed­u­ca­tion Depart­ment is aware that its ac­tions in this case will set a prece­dent. There are other for- profit col­leges that are tee­ter­ing on the brink of col­lapse. The Se­cu­ri­ties and Ex­change Com­mis­sion, for in­stance, re­cently an­nounced it was in­ves­ti­gat­ing ITT Tech for fraud. And in May, the Art In­sti­tutes an­nounced it would shut down more than a dozen cam­puses.

It’s clear that the Depart­ment of Ed­u­ca­tion does not want to be in the po­si­tion of hav­ing to can­cel po­ten­tially mil­lions of stu­dent loans. But any­thing less would be morally un­ac­cept­able.

The gov­ern­ment makes an ob­scene profit from the stu­dent loan pro­gram — an es­ti­mated $ 110 bil­lion over the next decade. That may be jus­ti­fi­able when stu­dents ac­tu­ally re­ceive an ed­u­ca­tion, but not when they’re de­frauded. Why not di­vert some of the $ 110 bil­lion to make scammed stu­dents whole?

Ac­cord­ing to at­tor­neys at the Na­tional Con­sumer Law Cen­ter, the Ed­u­ca­tion Depart­ment has the le­gal power to is­sue a broad can­cel­la­tion of Corinthian loans. Reach­ing into its own cof­fers to erase the debts of the hun­dreds of thou­sands of for­mer Corinthian stu­dents is both law­ful and the right thing to do.

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