Higher Ed, Not Debt and Advocacy Groups Respond to Department of Education Announcement Regarding Victims of Corinthian Colleges

If you’re a Corinthian student and want to see if you’re eligible for a refund, check this blog post.

Today, U.S. Secretary of Education Arne Duncan announced a new process for a small group of students deceived by Corinthian Colleges, Inc. Current and former students who were enrolled at a closed Corinthian campus as of June 20, 2014 can now apply for a refund. This is a 245 day increase from the current Closed School Discharge rule. In addition, students who can prove they were defrauded by their school – for example Heald College students who were lied to about job placement rates- may be entitled to a refund even if their school was not closed.

Here’s what Higher Ed, Not Debt and our partners are saying about it.

Center for American Progress Vice President for Postsecondary Education David A. Bergeron:

Today’s actions are a good first step in helping borrowers defrauded by the false promises of Corinthian Colleges. Creating a simple and expedited process for borrowers is particularly important for students to get the relief they need. It also reinforces the urgent need to get these schools out of the business of indebting students and wasting taxpayer dollars. Hopefully, the Department of Education will continue to take a similar approach for other affected students as it develops a more permanent process for dealing with those abused by poor-performing institutions.

Debt Collective:

How many times do Corinthian students have to be lied to?

Just as Corinthian Colleges portrayed its programs as a path to a better life when they were in fact debt traps, the Department of Education is portraying a process that re-victimizes students as a solution to a problem they created.

If Education Secretary Arne Duncan was truly “committed to making sure students receive every penny of relief they are entitled to under law” he would sign the “Order for Discharge of Federal Student Loan Debts” the Debt Collective sent him last week, immediately and automatically discharging Corinthian students’ debts. Students are entitled to receive full relief under law. The legal and most painless possible process for students is no process—they deserve an automatic discharge of their debts.

The Department of Education has been misusing taxpayer dollars for decades, funding up to 90% of Corinthian and other exploitative for-profit college chains. Hundreds of thousands of students were led into a debt trap funded by tax dollars. Automatic, class-wide discharges are not only just, they would also serve as a corrective for the Department’s flagrant failures to allocate public funds wisely. An automatic, class-wide discharge for defrauded Corinthian students would not cost taxpayers, as it would be offset by government profits on the student loan program.

In place of this obvious option, the Department of Education’s “solution” is a bureaucratically tortured process designed to provide relief only to those who hear about it and can figure out how to navigate unnecessary red tape.

In response to government inaction in the face of systemic corruption, 1,233 people from across the county who attended a variety of schools (for-profit, public, and private non-profit institutions) have pledged to stand in solidarity with Corinthian students and strike their own student loans should Department of Education continue to fail to meet its moral and legal responsibilities.

Higher Ed, Not Debt Campaign Manager Maggie Thompson:

Corinthian Colleges engaged in systematic fraud that left students with crippling levels of debt and poor job prospects. Corinthian students deserve a full and automatic refund, the Department’s plan as outlined offers relief for only a small group of students. We hope this action is just a first step as it is insufficient to address the true scope of the harm Corinthian caused students.

We encourage the Department of Education to further investigate and publicize additional findings of fraud at Corinthian campuses to ensure all students deceived by Corinthian have access to a refund.

To speak with an expert, contact Jamal Little at jlitttle@americanprogress.org or 202.741.6251.

National Consumer Law Center (NCLC):

While we praise the Department’s first step, we continue to have a number of questions and concerns, including:

Lack of Automatic Relief:  Although the Department could identify and grant automatic relief to all Heald College and closed school borrowers, it has instead decided to require that borrowers apply.  This is disappointing. The Department has acknowledged that historically only 6% of eligible borrowers contact the Department about closed school loan discharges.  How will the Department ensure students know about their eligibility and apply?

Need for Accurate Borrower Assistance: While encouraging volunteers to provide assistance is important, they must be well-trained and have access to experts who can help them answer complicated student loan questions.  In addition, both of the following are essential for ensuring that all eligible Corinthian borrowers are able to obtain relief:

1)  Adequately funded legal assistance: The options now available to Corinthian students are complex.  The eligibility requirements, closed school discharge forms, documentation requirements, and possible pitfalls remain both daunting and confusing.  This highlights the need for accurate legal advice and guidance for thousands of Corinthian borrowers throughout the country.

2)  Clear guidance and oversight of loan servicers: Loan servicers will be the first call for most borrowers and will continue to receive loan discharge and Defense to Repayment applications. As we previously described in a letter to the Department, in some cases loan servicers are providing incorrect information to borrowers. The Department must improve its oversight of loan servicers and ensure that they are providing accurate information, presenting borrowers with all of their options and properly evaluating loan relief applications.
Heald College Relief Limited to Post July 1, 2010:  This leaves borrowers who enrolled in the short window between November 2009, when Corinthian bought Heald Colleges, and July 1, 2010, on the hook for their federal loans.  Does the Department have any intention of providing similar relief to these borrowers?
No Answers for Remaining Borrowers:  We continue to urge the Department to provide widespread debt relief to all harmed Corinthian borrowers through a fair and efficient system, which will be created by the Special Master.  At a minimum this system must provide automatic group relief for borrowers covered by government agency findings of state law violations.  For other borrowers, the system must be accessible and simple, without any burdensome individualized evidentiary requirements.

Given that other large for-profit school chains may close in the near future, we hope the Department will move quickly to appoint a Special Master, create a fair Defense to Repayment process, improve its oversight of and provide more guidance to loan servicers, and provide sufficient funds for widespread legal assistance for eligible borrowers.

SEIU International President Mary Kay Henry (read more):

The 2 million members of SEIU, including 37,000 higher education faculty, are deeply committed to ensuring that college students receive a high-quality education at a cost they can afford. For many students who have been victims of predatory for-profit colleges, this offers hope of a fresh start. However, DOE, in partnership with appropriate state regulators and attorneys general, should establish a process that recognizes entire cohorts of students as victims of fraud. This is the most efficient and fair approach for both tax-payers and students.

Student Debt Crisis Executive Director Natalia Abrams:

It is promising that the Department has taken on this issue, however we are disheartened by their desire to quickly pass the buck to a dysfunctional Congress. The Department of Education should embrace its expertise on the issue of student loan debt and seize the opportunity to lead in creating solutions. Instead, the Department chose to deflect its responsibility to a Congress that has proven its unwillingness to act on student loan debt.

The Institute for College Access & Success Vice President Pauline Abernathy:

Today’s announcement is good news for thousands of former students of Corinthian Colleges.  The Department appropriately extended the timeframe for closed-school discharges back to June 2014 and created a dedicated hotline for former Corinthian students, as urged by a broad coalition including TICAS.

We praise the Department for recognizing the need for relief for students defrauded by Corinthian and other unscrupulous schools, and for committing to create a fair, clear, and efficient loan discharge process, including ‘debt relief to groups of students.’ Unfortunately, under the process announced today, all students will still need to apply for relief individually, although Heald students will have a much simpler process.

Where there is a federal or state finding of fraud or deception, such as at the Heald campuses and the Georgia, West Virginia, and Minnesota Everest campuses where the Department found widespread misrepresentation, students should be granted automatic group discharges. And the process for other students should be further streamlined so they don’t need to hire a lawyer to fill out the required forms.

We urge the Department to complete its investigation of other Corinthian campuses so defrauded students who attended them can more easily receive discharges, and to quickly develop and implement a comprehensive outreach plan so that all former Corinthian students know about the relief available to them.

Veterans Education Success:

Veterans Education Success is pleased to see debt relief for veterans who may have student loans on top of their GI Bill benefits. We are also encouraged by the Secretary’s announcement that the career college task force met for the first time in May and will begin holding public meetings later this summer to solicit input from the higher education community, including consumer advocates and student groups. Importantly, the task forces’ broad representation includes state Attorneys General, who along with the CFBP, FTC, and SEC have been in the forefront of investigating abuses by for-profit schools. We look forward to working with the task force to bring more accountability to the for-profit sector.

Young Invincibles’ Deputy Director Rory O’Sullivan:

We’re thrilled to see the Department of Education acknowledge that students unfairly taken advantage of by failing schools should be eligible for financial relief. The Department’s announcement today is a significant step toward justice for students of schools like Corinthian Colleges that have misled students about job placement rates and the quality of their programs for years. We hope that students at similar institutions with deceptive practices are eligible for the same relief.

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