Corinthian College Inc. Student Loan Debt Forgiveness
Student Loan Debt Forgiveness for half a million students from Corinthian Colleges (cnbc.com)
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
Fred:
It all could be wiped out. I showed examples of student’s loans where the interest, fees and penalties far exceeded the original loan. People 51 and older have an average of $40,000 which will never get paid even with a 2% rate and a max of $250/month. 14 years minimum. No one really knows wht many of these people have been through and many others do not care. It costs us more to keep them unproductive than canceling the loans or at least the interest, fees, and penalties. Then apply the forgiveness.
EOs can wipe out debt, as long as the power to do so was given to the President by Congress. As has every debt cancellation done so far. Try to take it past that point and court system here we come.
EM:
Everyone is tossing sand up in the air to obscure the issue. We can forgive just like trump did for veterans and Biden did for students who were scammed by Corinthian.
If Repubs want to buck this, go ahead. It will take the burden off of Biden. Repubs have done far more things to piss off constituents than Biden. Bullet-spewing-weapons laws being one of them. This will just add to the fire. Alan Collinge has well over a million-signature petition in hand.
The issue being there is no relief in bankruptcy for student loans and Biden is the one who has made this occur since the nineties.
Higher Education Act, which was originally signed in 1965
Specifically, the law grants a presidential administration, via the Education Secretary, authority to “enforce, pay, compromise, waive, or release” government-held federal student loans. Indeed, the Higher Education Act provided the authority for President Donald Trump and Biden to pause student loan debt payments during the coronavirus pandemic.
Biden Could Cancel Student Loan Debt Right Now By Signing an Executive Order
(So says Teen Vogue!)
President Biden should take immediate action to cancel student loan debt via executive
order.
Teen Vogue – June 14, 2021
Imagine for a moment that your student loan balance, no matter how high, instantly falls to $0, and the cloud of debt that hovers over your every financial decision disappears. Today, by simply signing an executive order, President Biden can make that dream a reality.
When the Department of Education was first given the power to issue student loans, it was also granted the power to “compromise, waive, or release any right” to collect on them, an authority known as “compromise and settlement.” Essentially, the Biden administration can suspend the collection of student debt altogether, and poof!, tens of millions of Americans would be student loan debt-free! It’d be like waving a magic wand, except the wand isn’t magic, it’s a legitimate legal authority vested in the Department of Education by Congress. …
I don’t see why the ‘Trillion Dollar Coin’ Solution is not being suggested yet again, this time as a solution to the Student Debt Problem.
Could a trillion-dollar coin solve the U.S. debt ceiling crisis?
CBC – Oct 16, 2021
(Basically, the US Mint produces a coin with a face value of $1T, turns it over to the US Treasury, which uses it to ‘pay off’ all outstanding student debt which is government held.
It might be harmful to do this to erase the US Nat’l Debt, but would be less so to use this approach on Student Debt, which probably would remain unpaid otherwise.)
Fred:
There are ~9 million people over the age of 51 who owe an average $44,000 or ~$380 million. If they had a loan rate of 2% and paid at $250 per month, it would take 17 years to pay off. No one has 2% loans and the likelihood of payoff is slip for most in this age category.
Another thing, I do not understand why they use student loans of #1.7 trillion as revenue. Unless it is to hide deficit spending? I remember Bush taking Iraq off budget so the budget would look good.
I know only enough about accounting to balance my checkbook & use Turbotax every April 15.
But… if outstanding student loans amount to $1.7T, then that looks to me like a big guv’mint revenue hole if it is not re-paid. So it would take more than one $1T coin to do so. There’s no particular reason why the guv’mint should not do this, just as Bush Jr can take ‘the Iraq War’ off the budget. And in this case, the law is on the guv’mint side, regarding the ‘special’ coins. Would this amount to a huge gift to all those students?
Yes. it would.
Fred:
Wasn’t student loans with no way out of them, a huge gift to banks, servicers, and other financial institutes?
Yes it is.
We are no longer talking about the original loan amount. We are looking at very large percentages of the original loan amount tacked on as penalties. Some have doubled in payback amount.
I gave an example of payback by those over fifty with REAL DAMN NUMBERS. Does that not bring some clarity to the issue? Does holding them captive for most of the remainder of their lives make sense to you? No one gets a 2% loan in student loans. The lowest we had was 3.5%. We had parent loans at 8%.
This is fixing something which should never have occurred.
Why are you not getting this?
If I were to go to a bank, get a loan to buy a car, got the car, did not pay the bank back, kept the car… How is that a gift to the bank?
Likewise with a loan taken to pay for college.
(I had an Army buddy who did this, dropped out of college, enlisted, bought a used BMW, kept it. I never knew if he paid off the loan. Nice car!)
BMW 2002
SINCE WHEN is a car loan the same as a student loan? Its not.
Student loans are like herpes, there is no escape. You can declare bankruptcy, keep the car with car loans. With student loans, the government and banks “will” follow you forever and have done so. They will even attach your income and Social Security. There is no escape from a student loan.
In any case, minting those coins would be an interesting way to end the student debt crisis forthwith. I believe I read that Janet Yellen does not believe it’s (shall we say) ‘kosher’. I would respond that it doesn’t have to be kosher, if it’s ‘ legal.’
Of course, is Ft Knox secure enough to store those coins for all time?
Are such college-loan debtors being imprisoned for non-payment?
I am not saying ‘Lock’em up!’. I am saying ‘Mint those coins!’
(In the Army, paying off my Defense loan debt – working as an ‘instructor’, not a teacher, getting no debt relief, bought my first car – a VW bug, on a loan, which I paid off in a few years, on an E-5’s wages.)
Fred;
What year? Again CAR LOANS are not the same as Student Loans.
Another difference!
If cars can be repossessed for non-payment of debt,
It would seem that an education cannot be,
Phil K Dick could have written a cool novella about that.
A loan is a loan is a loan, as far as I’m concerned.
Fred
Go away, you are wrong. And you did not answer my question. I walked uphill both ways to get my education. Don’t respond I really do not care what your being concerned.
What year did you do all of this:
(In the Army, paying off my Defense loan debt – working as an ‘instructor’, not a teacher, getting no debt relief, bought my first car – a VW bug, on a loan, which I paid off in a few years, on an E-5’s wages.)