A Path 'To Debt Relief' For Defrauded Corinthian Students

Enlarge this image toggle caption David Goldman/AP David Goldman/AP

U.S. Education Secretary John King announced findings of fraud against 91 separate campuses of the for-profit Corinthian Colleges at a press conference in Boston today.

"Corinthian was more worried about profits than about students' lives," said Secretary King.

The announcement is intended to smooth the way for more former Corinthian students to apply for relief of their student loans. Corinthian had over 70,000 students when it ceased operations in 2014, and some 350,000 since 2010. So far just 8,800 have had their loans discharged. That's according to a new report by the Department of Education's Special Master in charge of reviewing borrower defense claims.

Despite the findings of fraud, and numerous legal actions taken by state attorneys general, the DOE continues to collect student loans taken out by Corinthian students. Current regulations require that former students of these colleges fill out forms and apply individually for relief of their loans. Student advocates would like to see the process streamlined considerably.

"Everyone is still in debt, and the DOE and its servicers are still collecting," said Laura Hanna of Debt Collective, which has organized Corinthian students in a "debt strike".

"The Debt Collective urges the DOE to stop wasting taxpayer dollars trying

to collect fraudulent debt from those who attempted to get an education. We

instead encourage the department to pursue collections on investors of

for-profit scam schools."

According to ProPublica, a lawsuit filed by California Attorney General Kamala Harris alleges Corinthian actively recruited homeless students and advertised programs that they didn't offer. This week, a judge in California ordered the colleges to pay $1.1 billion in damages, including repaying $800 million to students, but given that the company is in bankruptcy, restitution for students by this means is unlikely.

And according to Barmak Nassirian, who's a federal student aid expert at the American Association of State Colleges and Universities, this is all too little, too late.

"We waited for them to commit the fraud, to cash the check, to go out of business and even then it took us almost a year to finally admit, 'Oh, I think there might have been some fraud going on here,'" he said.

He's encouraged by the announcement, but also says Corinthian executives should be held accountable.

"The people who did this are multimillionaires and not a dime will be recovered from them."

Nassirian points out other for-profit colleges, though certainly not all, are engaging in similar behavior. "Triage after the disaster only goes so far to prevent future disasters," he said.