New Management Wants Corinthian to Receive Federal Support Even in Bankruptcy
When Education Credit Management Corporation (ECMC) announced plans to buy 56 failing Corinthian College campuses the Department of Education hailed the deal, claiming ECMC would look out for student interests. But ECMC’s first major action since the announcement casts serious doubt on that claim.
According to EdCentral, ECMC is hard at work lobbying Congress to add a special exemption to the Higher Education Act (HEA) to allow Corinthian Colleges to continue receiving federal student aid dollars – even if Corinthian declares bankruptcy. The HEA currently states that colleges are only eligible for federal student loans if they are financially stable, protecting students and taxpayers from failing institutions. But ECMC wants Congress to extend Corinthian unprecedented benefits in bankruptcy.
If ECMC were truly looking out for students, it would ask Congress to help students who are facing financial hardship, and not to bailout Wall Street corporations. Currently, and partly due to ECMC’s prior efforts, it is nearly impossible for students to discharge their student loan debt in bankruptcy. But because of schools like Corinthian, which saddled its students with high tuition but poor job prospects, many of the 40 million students with student loans need the option to use bankruptcy to manage their debt and start over.
Congress can act by enacting consumer protections to help students who are facing crippling financial hardship. American consumers and businesses have long used bankruptcy as a tool to get out of their most severe debts and get their lives back on track, yet borrowers inundated with student loans have not had access to the same opportunity.
ECMC should live up to its promise and ask Congress to restore fairness for student loan borrowers, not to create special rights to bailout Corinthian.
Posted on 5 December 2014