An approximate 560,000 Corinthian College Inc. former students will have their loan balances forgiven as announced by U.S. Secretary of Education Miguel Cardona.
“As of today, every student deceived, defrauded, and driven into debt by Corinthian Colleges can rest assured that the Biden-Harris administration has their back and will discharge their federal student loans,”
Formerly, Corinthian Colleges Inc. was one of the largest for-profit education companies in the United States. At its peak, CCi operated over one hundred Everest, Heald and WyoTech campuses throughout the United States and Canada.
Looking back at his original hopes for the company, Corinthian Colleges Inc. chairman and chief executive, the company’s largest individual shareholder David G. Moore said;
“He never imagined his grubstake of $100,000 would soar to $100 million.”
In 1995, National Education Centers Inc. auctioned off its chain of private colleges. Moore and 11 others thought they could do better with the franchise and bought it.
The company operated 125 private colleges and technical schools, along with 17 corporate training centers in the United States and Canada. Its 52,000 students were enrolling in everything from airplane repair to business administration.
Under an agreement with the U.S. Department of Education, Corinthian Colleges put 85 of its U.S. campuses up for sale and closed the remaining dozen. The for-profit college chain was operating campuses under the names Heald, Everest and WyoTech. It has more than 70,000 students across North America. It being the largest-ever college, by enrollment, to be shut down in this way.
Accusing it of predatory and unlawful practices and Corinthian College faced numerous lawsuits.
It all started January 2014 when the U.S. Department of Education asked the company to provide detailed records, including Social Security numbers, job placement results, and attendance and grade changes, of students. A part of compliance with federal regulations designed to make sure colleges offer a good value to students. Those colleges not complying were cut off from student aid money.
By June 2014, Corinthian Colleges had not responded. The Department of Education placed a three-week hold on financial aid payments. The cash freeze created problems for the college, which was experiencing cash-flow difficulties.
The schools were guilty of predatory and unlawful practices. CCI, faced lawsuits from the Consumer Financial Protection Bureau as well as Vice President Kamala Harris when she was attorney general of California. The company filed for Chapter 11 bankruptcy in 2015.
Corinthian recruitment practices targeted low-income, vulnerable students using false advertisements misrepresenting job placement rates and the value of its educational programs. Corinthian were also illegally using the seals of the armed forces in its advertisements to recruit veterans. It engaged in illegal debt collection practices. The California Attorney General’s Office obtained a $1.1 billion judgment against Corinthian for its misconduct.
Five hundred-thousand borrowers stand to benefit from a debt cancellation of approximately $5.8 billion. This action being the largest single debt forgiveness action taken by the government to date.
Former students of the CCI colleges still having a student loan balance should be receiving refunds for previous payments made on their debt according to senior administrative officials. The relief should be automatic. Meaning borrowers will not need to navigate any paperwork or apply. Qualifying borrowers are expected to be notified within weeks.
“Many borrowers have been waiting for years and years for their applications to be processed,” said higher education expert Mark Kantrowitz. “They’ll no longer be waiting in limbo.”
To date, the Biden administration has approved $25 billion in loan forgiveness for 1.3 million borrowers.
The news comes as the White House is mulling whether to move ahead with broad-based student loan forgiveness. Most recently, officials were leaning toward wiping out $10,000 for all borrowers who earn below $150,000, but a spokesperson for the administration said they’ve haven’t come to any decision yet.
In any respects what students faced at Corinthian Colleges Inc. with student loans is similar to what traditional college students face with their loans. As I have pointed out, paying back forbearance costs occurs before loan principal is touched. Some here claim it is legitimate to cloud the issue, it is not. Usually when someone goes into forbearance it is because, there is job loss, health, or some other issue which prevents income. Not being able to pay down principal until forbearance is paid creates additional interest on the total. This is a usuary practice.
Making it difficult to gain a better education backfires in the end as the government loses out on potential higher income, more consumption, and more taxes.
“Operating Career College Lucrative Vocation for CEO” – Los Angeles Times latimes.com, Karen Robinson-Jacobs, September 2003
“The Collapse Of Corinthian Colleges” : NPR Ed : NPR, Anya Kamenetz, July 2014
“CFPB Sues For-Profit Corinthian Colleges for Predatory Lending Scheme” | Consumer Financial Protection Bureau (consumerfinance.gov), September 2014
“Attorney General Kamala D. Harris Files Suit in Alleged For-Profit College Predatory Scheme” | State of California – Department of Justice – Office of the Attorney General, Rob Bonta, AG CA, October 2013