With Debt Relief for Corinthian Students Finally Here, Time to Stop Funding Predatory Colleges
The Hill has reported this afternoon that the Biden Administration, at an event tomorrow featuring Vice President Kamala Harris, will announce widespread debt relief for former students of for-profit Corinthian Colleges, which collapsed in 2015 following revelations of blatant deceptive practices.
[UPDATE 06-01-22 6:45 pm: The U.S. Department of Education just released a statement announcing that “it will discharge all remaining federal student loans borrowed to attend any campus owned or operated by Corinthian Colleges Inc. … from its founding in 1995 through its closure in April 2015. This will result in 560,000 borrowers receiving $5.8 billion in full loan discharges. This includes borrowers who have not yet applied for a borrower defense discharge, who will have their Corinthian loans discharged without any additional action on their part.”]
The administration should be commended. Broad relief for the ex-Corinthian students is long overdue. The Obama administration finally took action, fining Corinthian $30 million and stopping federal aid for new students, after the company’s schools, which included Everest College and Heald College, faced congressional and media investigations, as well as law enforcement actions, including a 2013 lawsuit filed by then-California attorney general Harris. The probes revealed that Corinthian, which at its peak was getting more than $1.4 billion annually from taxpayers for student grants and loans, had for years engaged in deceptive and abusive recruiting, misleading students about job placement outcomes and other critical matters, and leaving them deep in debt, without the career advancement they sought.
If you want a blunt example of Corinthian’s shady behavior, read my 2014 piece about how Everest College enrolled and cashed the financial aid checks of a profoundly intellectually disabled young man who believed a degree from the school would allow him to become a police officer.
The Obama and Biden administrations had previously granted debt relief to certain categories of the former Corinthian students, based on documentation of abuses by the company, and in the wake of activism and lawsuits brought by students. (In between, the Department of Education under Donald Trump and Betsy DeVos did everything possible to prop up predatory colleges and deny relief to the industry’s victims.) But broader relief is much better, where a school engaged in systematic wrongs against students, especially where it targeted veterans, single moms, low-income students, people of color, immigrants — people with less family experience with higher education, who were outmatched by sophisticated corporate scammers.
Many advocates for students were hoping tomorrow’s announcement would be for across-the-board debt relief for all student borrowers, promised to some extent by candidate Joe Biden in 2020 and rumored to be on its way. Significant relief makes sense, because our federal and state politicians failed a couple of generations of Americans by sharply reducing government investment in higher education and instead directing students to borrow heavily if they wanted a shot at a better future.
However the administration resolves the politics and complexities of the wider debt relief question, there is no doubt that the people most victimized were those who were deceived, overcharged, and under-educated by for-profit colleges.
Federal loan cancellation, however expensive, will not come close to making these people whole. It doesn’t make up for the months and years they spent pursuing worthless degrees, the hours away from family and sitting at the bus stop, the disappointment and humiliation they felt when they blamed themselves for their bad outcomes — and again when they realized they had been scammed. It also doesn’t erase the out-of-pocket payments they made and the tens of thousands many of them still owe to schools and banks from non-federal, high-interest private loans that a lot of students needed to pay their tuition bills.
And nor does federal loan cancellation provide real justice and deterrence for the strip mall and Wall Street con artists who took the money from students and taxpayers, who got paid and, mostly, have gotten away with it.
The for-profit college industry, which holds it annual meeting this week in Las Vegas — as usual bringing in paid celebrities and paid-off politicians to lend their prestige to a troubled industry — has fought furiously against measures to provide more debt relief to defrauded students, because they fear the Department of Education will, one day, although it hasn’t yet, come after them to recoup the losses. But their even bigger fear is that repeated debt relief will convince the Department that certain schools, and maybe even categories of schools, always end up being a bad investment for both students and taxpayers.
And there, I can relate. Because the revelations of the past decade-plus showed that, as bad as Corinthian Colleges was, there have been many other colleges, large and small, that have run on a similar business model, and abused students just as badly. Some of those operations, some still for-profit, some now disguised as non-profits, remain in business today, still accredited by accrediting agencies recognized by the Department of Education, and thus still enrolling men and women who believe their false promises. These include the schools operated by the for-profit companies Perdoceo, Zovio, and IEC. The Department has ample evidence of abuses, of stark violations of federal regulations, at those chains and more.
It makes no sense, as the Department is at last providing serious relief to Corinthian students, for it to continue sending billions in federal aid to schools very much like Corinthian, for it to continue to create another generation of victims, who will rightly demand debt cancellation down the road.
Another promise Joe Biden made during the 2020 campaign was that his administration would “require for-profits to first prove their value to the U.S. Department of Education before gaining eligibility for federal aid.” It’s time to keep that promise, in addition to the debt cancellation promise. It’s time to stop treating predatory colleges like they are permanently entitled to federal aid, regardless of their bad behavior. These companies are, essentially, federal contractors, and as to each school, the government should be asking, through regulations and enforcement: Is this a good investment or a bad investment? Does this school help students, or hurt them?