Unveiling Student Debt Relief, Duncan Hits For-Profit College Industry and Its Friends in Congress
U.S. Secretary of Education Arne Duncan just announced a debt relief package for students who attended schools run by now-bankrupt Corinthian Colleges. In doing so, Duncan sharply attacked for-profit colleges that have engaged in fraudulent acts, and he criticized members of Congress who have blocked reforms to hold the industry accountable.
The new debt relief package directly targets some 15,000 student borrowers at closed Corinthian campuses, with collective debt of about $208 million, and an overlapping group of some 40,000 students at Corinthian’s Heald College schools, where the Department already had identified specific abuses, and student debt is about $650 million. But in fact, Department officials said, the new debt relief approach, including the appointment of a special master, to be named “in the coming weeks” according to the Department, to address student claims, extends to the universe of students at Corinthian and, indeed, at other for-profit colleges that have engaged in fraudulent practices.
Department officials said that relief for defrauded students was potentially available to students who had attended Corinthian schools going back well before the school’s 2014-15 collapse, and included students whose campuses were acquired this year by debt-collection company ECMC. Duncan said the plans would apply beyond Corinthian. He foresaw the collapse of other companies in the for-profit college industry: “Sadly this will likely not be the last domino to fall.”
- Expanding eligibility for Corinthian students to apply for a closed school loan discharge, extending the window of time back to June 20, 2014, to capture students who attended the now-closed campuses after Corinthian entered into an agreement with the Department to terminate Corinthian’s ownership of its schools.
- Relying on evidence established by “appropriate authorities in considering whether whole groups of students (for example, an entire academic program at a specific campus during a certain time frame) are eligible for borrower defense relief. This will simplify and expedite the relief process, reducing the burden on borrowers.” The Department also announced that students who attended many Heald programs from 2010 to 2015 already qualify on this basis.
- Allowing all former Corinthian students who apply for borrower defense — including those at campuses acquired by ECMC — to have their federal loans immediately placed into forbearance, which stops their monthly payments, pending resolution of their claims.
- “Appointing a Special Master dedicated to borrower defense issues: The Department will appoint a Special Master to oversee borrower defense issues and charge that person with ensuring the process is simple, streamlined, and fair to students and taxpayers. While the specific steps announced today are for former Corinthian students, the Special Master will help develop a broader system that will support students at other institutions who believe they have a defense to repayment.”
The Department, in a press release, listed a series of reforms it had undertaken or planned to pursue to protect students and taxpayers from predatory for-profit colleges abuses.
I am still extremely disappointed with the deal that the Department blessed allowing ECMC to acquire some 50 Corinthian campuses, and with all the broken promises by ECMC since then. I am dismayed that as we speak the Department is allowing predatory companies like EDMC, Kaplan, ITT, and Career Education Corp. to take new taxpayer millions and billions to sign up students for programs that will ruin their lives. It’s crazy to, on the one hand, declare these predatory colleges a disaster area in need of a bailout, and on the other hand keep funneling federal money to them and telling students it’s okay to enroll.
I will look carefully at the implementation of the debt relief plan the Department announced today to see if students are truly being offered an opportunity to escape crushing debt, and if law enforcement findings are adequately taken into account. As Senators Dick Durbin and Richard Blumenthal just said in a statement, “Today’s announcement leaves questions about how the Department will address students seeking a discharge of their federal student loans based on Corinthian’s fraudulent activities. In determining a process, we encourage the Department to work closely with State Attorneys General and other state and federal agencies as they have already made voluminous findings about Corinthian’s misconduct.”
But at least in terms of a strong statement of support for students, and condemnation of corrupt colleges and their corrupted companions in Congress, this is a good day. Arne Duncan is standing up, for real, and taking on the robber barons of higher education at last.
This article also appears on Huffington Post.