Senate Democrats Demand Obama Administration Forgive Corinthian Students’ Debts

By Shahien Nasiripour
The Huffington Post (12/10/14)

A group of Senate Democrats has urged the Obama administration to forgive debts incurred by thousands of current and former students at troubled for-profit schools owned by Corinthian Colleges Inc.

Thirteen Senate Democrats, including Sens. Elizabeth Warren (D-Mass.), Richard Durbin (D-Ill.) and Jack Reed (D-R.I.), demanded in a stinging letter on Tuesday that Education Secretary Arne Duncan “immediately” forgive federal student loans taken out by students at Corinthian-owned schools, such as Everest, WyoTech and Heald.

The lawmakers argued that because federal and state authorities have accused the company of duping students into taking out loans by advertising false job placement rates, and federal law enables borrowers to have their loans discharged if their schools misled them into taking out federal student loans, current and former students shouldn’t be forced to repay those debts.

At the moment, the senators’ position puts them at odds with the U.S. Department of Education, which has generally sought to limit the amount of debt it forgives for students at troubled colleges. In the case of Corinthian, a company whose practices for years have been overseen by the Education Department, yet now is effectively being forced to shut down amid numerous state and federal investigations, the department has appeared more interested in finding potential buyers for the company’s schools rather than helping students who may be stuck with unaffordable loans and worthless credentials.

If Duncan ultimately agrees, borrowers would have state attorneys general and the Consumer Financial Protection Bureau to thank. Corinthian, meanwhile, could be on the hook for the Education Department’s losses. Other for-profit colleges in regulators’ crosshairs may also be affected.

The Consumer Financial Protection Bureau and state attorneys general in California,Massachusetts, and Wisconsin have filed separate lawsuits over the past year alleging Corinthian fraudulently induced students to take out loans to attend its schools by misleading them about future job prospects.

Even the Education Department has questioned Corinthian’s job placement rates. In aJan. 23 letter to the company, the department’s chief compliance officer, Robin Minor, wrote that Corinthian had “admitted to falsifying placement rates” at various campuses, which along with other concerns “suggest systemic deficiencies” throughout the company.

Federal law states that borrowers could refuse to repay their loans — and get a refund on payments already made — as a result of “any act or omission of the school attended by the student that would give rise to a cause of action against the school under applicable state law.” …

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