Students Who Took Private Loans Through Corinthian Colleges Eligible for Relief

Source: Melissa Korn, Wall Street Journal, August 17, 2017
 
Former Corinthian Colleges Inc. students who took out 46,000 private loans through the now-defunct school will be eligible for $192 million in loan relief, based on a settlement announced Thursday by 13 state attorneys general and the Consumer Financial Protection Bureau.  The settlement is subject to approval by a federal court in Oregon that is overseeing the receivership of the investment firm that owned the loans, Aequitas Capital Management LLC.  Roughly 41,000 students took out what Corinthian called Genesis private loans, coordinated through Aequitas’s Campus Student Funding affiliate. …

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Corinthian Colleges Loses Federal Lawsuit As Education Department Faces Reckoning
Source: Shahien Nasiripour, Huffington Post, October 28, 2015

Defunct for-profit college chain Corinthian Colleges Inc. violated federal law by using false job placement rates to deceive 115,111 former students into taking out student loans, a federal district court judge ruled on Tuesday.  In a lawsuit brought last year, the Consumer Financial Protection Bureau alleged that Corinthian duped prospective students into enrolling and taking out loans by falsely advertising future job prospects. The company, which declared bankruptcy in May, operated for-profit schools under the Everest, Heald and Wyotech brands and had previously denied wrongdoing. The ruling by Judge Gary Feinerman in Chicago could force the Department of Education to forgive the former students’ federal student debt, thanks to a provision in federal law that gives student debtors the right to apply for total debt forgiveness if schools mislead them into taking out federal student loans. Former Corinthian students have taken out nearly $4 billion in loans from the Education Department over the last five years.

Corinthian Colleges Secretly Funded D.C. Think Tanks, Dark Money Election Efforts
Source: Lee Fang, The Intercept, May 4, 2015

….The filing doesn’t list amounts, but shows that Corinthian made payments to Crossroads G.P.S., a group co-founded by Karl Rove that has raised over $300 million to elect Republican members of Congress through campaign advertising. Crossroads G.P.S., a 501(c)(4) nonprofit, does not disclose any of its donors…. APCO Worldwide, a lobbying firm, is among the Corinthian creditors, though the firm never registered to represent Corinthian under the Lobbying Disclosure Act. The listing reveals a number of payments to influential D.C. groups that have battled regulations on the for-profit college industry. The U.S. Chamber of Commerce is listed multiple times as a Corinthian creditor. The Chamber has run campaign advertisements on behalf of opponents of the Department of Education’s “gainful employment” regulation, which would measure the performance of vocational programs. The Chamber made defeating the rules a top priority. The American Legislative Exchange Council, a nonprofit that helps corporate interests draft model legislation, is listed as a creditor. As Republic Report reported, although for-profit colleges are far more expensive for programs offered by community colleges and other public institutions, ALEC drafted a resolution calling for state officials to “recognize the value of for-profit providers.” Another gainful employment regulation opponent, the American Enterprise Institute, is listed as a Corinthian creditor. AEI scholars have repeatedly attacked the rules, calling them an example of the Obama administration’s “crusade against for-profit colleges.” Last October, Andrew Kelly, AEI’s resident scholar on higher education reform, specifically defended Corinthian and criticized the “Obama administration’s bloodlust for such schools.”….


Higher Ed Lobby Quietly Joins For-Profit Schools to Roll Back Tighter Rules
Source: Alec MacGillis, ProPublica, May 5, 2015

….For most of Obama’s tenure, the department’s top regulatory priority has been reining in abuses by the for-profit sector, which as of 2012 accounted for only 13 percent of the nation’s college enrollment, but 47 percent of the defaults on loans. A 2012 Senate report found that taxpayers spent $32 billion in the prior year on companies operating for-profit colleges—which rely almost entirely on federal student aid for revenues—and that most of their students left without a degree, half within four months. The report found that at the 30 companies studied, the average CEO pay was $7.3 million, and that 22.4 percent of revenue went to marketing and recruiting, 19.4 percent to profits, and only 17.7 percent to instruction. A 2010 Government Accountability Office report found that four colleges “encouraged fraudulent practices” in meetings with undercover investigators posing as prospective students and that all 15 colleges investigated, including industry leaders such as the University of Phoenix and Kaplan Inc., “made deceptive or otherwise questionable statements.” A Bloomberg investigation that year found that for-profit colleges were being particularly aggressive in recruiting military veterans, to capitalize on increased funding available under the GI Bill. Late last year, federal and state authorities in Florida charged that a for-profit chain there was hiring exotic dancers to recruit students…..

For-Profit Colleges Face a Loan Revolt by Thousands Claiming Trickery
Source: Tamar Lewin, New York Times, May 3, 2015

…About 150 former students have joined the debt strike. More than 1,000 others are formally asking the Education Department to wipe out their debt, arguing that the school used false graduation and placement statistics to entice them into taking out burdensome debt. And many of the 16,000 students whose schools were closed last week are also likely to apply for loan discharges. …. Their effort could cost the department — and ultimately taxpayers — millions of dollars, raising questions about the department’s double role as both lender and collector of federal student loans. ….. The department itself provides the money for federal student loans, and collects payments from students. It also decides when colleges do not meet the basic eligibility standards to receive federal student funds, which provide almost all the revenue of for-profit colleges like Corinthian. …. As part of the sale, the Consumer Financial Protection Bureau negotiated $480 million of forgiveness for students’ private loans. Their federal loans, which can be discharged only by the Department of Education, stayed intact….

For-profit Corinthian Colleges has closed its 28 remaining campuses
Source: Mike Kennedy, American School and University, April 27, 2015

Company has been under increasing scrutiny by federal and state investigators for questionable operations. Following enforcement actions by the U.S. Department of Education and individual states, Corinthian Colleges, Inc. has closed its remaining 28 campuses. The company says in an announcement on its website that it is working with other schools to provide continuing educational opportunities for about 16,000 students affected by the closings. The closings come several months after Corinthian, under growing scrutiny from federal investigators, sold 56 Everest and WyoTech campuses in November 2014. The remaining campuses that were closed today were Corinthian’s 13 remaining Everest and WyoTech campuses in California, Everest College Phoenix and Everest Online Tempe in Arizona, the Everest Institute in New York, and Heald College–including its 10 locations in California, one in Hawaii and one in Oregon. Under Secretary of Education Ted Mitchell says in a blog post that the department took action against Corinthian last year after the company failed to respond to inquiries about questionable practices. Corinthian had been accused of using false and misleading job placement data to market its schools and recruit students and of changing student grade and attendance data to hide performance problems.

Regulators Sue Corinthian Colleges for Allegedly Harassing Low-Income Students
Source: Natalie Kitroeff, Bloomberg Businessweek, September 16, 2014

The Consumer Financial Protection Bureau is suing Corinthian Colleges, one of the largest operators of for-profit colleges in the U.S., on grounds that it deceived students and harassed them to collect on student loan debts. The CFPB, a federal government agency, charges that Corinthian used false promises of employment prospects to lure students, induced them to take out predatory loans, and publicly humiliated them when they couldn’t pay.

Corinthian boosted figures to obtain federal funds
Source: Chris Kirkham, Los Angeles Times, July 16, 2014

…As federal regulators move to shut down Everest’s parent company, Corinthian Colleges Inc., corporate documents and interviews with company insiders provide a behind-the-scenes portrait of how Corinthian persuaded hundreds of thousands of low-income students to fork over as much as $40,000 for vocational degrees. Interviews with staffers and students, along with government lawsuits and company regulatory filings, reveal a systematic effort to manipulate data used to recruit students and retain eligibility for federal student aid — the lifeblood of company profits. Federal and state investigators have long viewed Corinthian, based in Santa Ana, as one of the most problematic players in the troubled for-profit college industry, which has come under scrutiny for predatory marketing. The student loan pipeline fueled the company’s rapid enrollment growth, peaking at more than 110,000 students in 2010. Corinthian charges students up to 10 times the cost of a comparable community college education. That requires many of them to take on more debt than they can repay — leaving taxpayers on the hook for mass defaults….

Corinthian Colleges Warns of Possible Shutdown / Restrictions on Federal Funding Leave For-Profit Educator in Cash Crisis
Source: Stephanie Gleason and Josh Mitchell, Wall Street Journal, June 19, 2014

One of the country’s largest for-profit education companies warned Thursday that it may have to shut down after the Obama administration moved to restrict the company’s access to federal funding. Corinthian Colleges Inc., which operates Everest College and other schools, has about 72,000 students who receive roughly $1.4 billion in federal financial aid each year. But the company and its for-profit rivals, which enroll about 13% of the nation’s higher-education students, are drawing greater scrutiny from regulators over concerns about their marketing, dropout rates and loan defaults among their students. The U.S. Department of Education has increased its oversight of Corinthian because, it said, the school hasn’t addressed concerns about its marketing practices, including allegations of falsifying job-placement data. The company, whose schools also include Everest Institute, WyoTech and Heald, said in a financial filing Thursday that it has expended substantial resources responding to the department’s concerns, and will continue to cooperate with its review. …

For-Profit College Enrolls, “Exploits” Student Who Reads At Third Grade Level
Source: David Halperin, Republic Report, June 2, 2014

A librarian at a southern California campus of Everest College abruptly resigned last week, deeply upset that the for-profit school had admitted into its criminal justice program a 37-year-old man who appears to read at a third grade level. The man, who shakes, speaks haltingly, and may suffer from a developmental disability, told the librarian he expected to be a police officer after completing the program. But the librarian, Laurie McConnell, is certain he can never obtain such a job.

McConnell, who had been devoting much of her time at work to helping the student with his reading assignments, wrote to the campus’s president on May 21 that the student would be “impossible to place in the field” and had “no idea of the ramifications of signing the enrollment agreement” at Everest. But the president, Richard Mallow, did not give her a response. McConnell quit on May 27, four days after she first contacted me to say that the student was “being defrauded” by Everest. “He breaks my heart,” she told me, “and I feel completely helpless.”

Everest is owned by for-profit giant Corinthian Colleges, which is facing a lawsuit for fraud by the attorney general of California and is under investigation by 17 other state attorneys general and four federal agencies. Kent Jenkins, vice president for public affairs and communications at Corinthian, told me today that the campus believed it was appropriate to take a chance on admitting the student. He also raised the possibility (see below) that Corinthian would refund some or all of the student’s costs if he ended up dropping out.

Corinthian in recent years has received as much as $1.46 billion annually in taxpayer money, about 83 percent of its total revenue. That $1.46 billion represents nearly 4.5 percent of the colossal $33 billion that for-profit colleges have been getting annually from federal student aid….