Government to Forgive Student Loans at Corinthian Colleges
June 8, 2015 9:52 PM   Subscribe

New York Times:
Mr. Duncan also said the department planned to develop a process to allow any student — whether from Corinthian or elsewhere — to be forgiven their loans if they had been defrauded by their colleges. A special master would be appointed within three weeks, department officials said, to create procedures to apply for relief that are “durable, not just for Corinthian but beyond.”
Previously, previouslier. posted by Little Dawn (30 comments total) 30 users marked this as a favorite
 
On one hand, this is a good solution for the students defrauded by Corinthian.

On the other hand, the better solution would have been to make it so that student loan debt is dischargable in bankruptcy. But that would require asking Congress to be, you know, useful.
posted by NoxAeternum at 9:56 PM on June 8, 2015 [23 favorites]


Any castle can be unmade one brick at a time, so long as the masons are too busy filibustering welfare to notice.
posted by an animate objects at 10:02 PM on June 8, 2015 [4 favorites]




an animate objects: "Any castle can be unmade one brick at a time, so long as the masons are too busy filibustering welfare to notice."

Yeah, I think it's, "Congratulations you are now debt free, but good luck finding a job that pays a living wage. Oh, and you might get hungry or cold or wet, but deal with it, serf. We were generous enough to forgive your debt. What more do you greedy slobs want?"

What a (pathetic) country.
posted by InsertNiftyNameHere at 10:17 PM on June 8, 2015 [1 favorite]


Never trust any product that labels itself anyone who calls himself Corinthian (Warning: nightmare fuel).
posted by filthy light thief at 10:40 PM on June 8, 2015 [2 favorites]


There's no way they'll provide enough resources to manage the number of students who need this.
posted by five fresh fish at 11:14 PM on June 8, 2015


That's the idea. Only 6% usually seek debt forgiveness, so it won't cost that much!
posted by benzenedream at 11:21 PM on June 8, 2015


In a news conference call on Monday afternoon, Mr. Duncan emphasized the plight of students who took on huge debt and ended up with a degree that meant little to employers, or no degree at all.

While obviously fraudulent colleges are a special case, I worry about this line of thinking. Equating the value of a degree with how employers view it is almost always bad news for the humanities. On the other hand, if we then end up with a situation where humanities students get forgiven their loans, I think I'm cool with that...
posted by lollusc at 2:10 AM on June 9, 2015 [7 favorites]


Taxpayers could pay a huge price for forgiving so many federal loans; the government has never before opened debt relief to such a potentially large pool of students. The department estimated that if all 350,000 Corinthian students over the last five years applied for and received the debt relief, that cost alone could be as much as $3.5 billion.

Which is about $10k per student which does not seem to be a crushing debt or anything like a crisis demanding Federal intervention.

The scandal is a "school" like this being able to get its hands on 3.5 billion taxpayer subsidized, "just sign here" dolllars, to begin with.
posted by three blind mice at 2:29 AM on June 9, 2015 [9 favorites]


Yeah, I think it's, "Congratulations you are now debt free, but good luck finding a job that pays a living wage. Oh, and you might get hungry or cold or wet, but deal with it, serf. We were generous enough to forgive your debt. What more do you greedy slobs want?"

... maybe a tiny little bit of personal accountability...
posted by imthebadgerdamnit at 2:39 AM on June 9, 2015 [1 favorite]


Taxpayers could pay a huge price for forgiving so many federal loans

The people who were defrauded by Corinthian College are also taxpayers. And if they're not compensated for the money they were cheated out of, they will pay a huge price.
posted by escabeche at 4:01 AM on June 9, 2015 [6 favorites]


Giving people who were obviously defrauded some form of recompense is clearly a good thing. I would hope that it is accompanied by serious efforts to claw money back from the for-profits and, when necessary, arrest individual executives for their criminal acts.

More generally, and as discussed just the other day in another FPP, it is crazy that this one form of debt, that is primarily taken on by very young people, is the most difficult to get out from under. The overall system needs to be fixed, with these for-profits as just the most egregious examples.
posted by Dip Flash at 4:40 AM on June 9, 2015 [1 favorite]


In efforts to find some silver lining to the "taxpayers are losing because we're giving these students a fresh start" line of reasoning - - Presumably those loans went to paying employees and contractors for Corinthian. The outright fraud aside I don't see too much difference in ultimate effect of the money being spent when compared to the bailouts or the stimulus.
posted by Karaage at 5:04 AM on June 9, 2015


it is crazy that this one form of debt, that is primarily taken on by very young people, is the most difficult to get out from under.

The Job Creators need a steady stream of indentured servants. What, you think people are just gonna indenture themselves? No, you gotta sell it. Hopes and dreams baby, hopes and dreams!
posted by aramaic at 6:12 AM on June 9, 2015 [3 favorites]


It is sad that no one even talks about the damages of the students time and impact on lifetime earnings. These people not only took in debt, if they had gotten an actual degree they're earnings would be higher from the get go. Starting a career at 25 is way different than staying a career at 30 or 35.

I'm glad that these individuals can apply to get rid of these student loans, but the whole thing is criminal.
posted by AlexiaSky at 6:41 AM on June 9, 2015 [1 favorite]


Waiting for the follow-up announcement that everyone involved with the running of Corinthian is going to prison.

...any day now.
posted by a fiendish thingy at 6:58 AM on June 9, 2015 [5 favorites]


I keep saying, any Higher Ed reform is going to require cutting for profit institutions out of the federal funding stream, which also sells not-particularly useful courses to people in military service.
posted by GenjiandProust at 7:33 AM on June 9, 2015 [1 favorite]


The experience of the successful writer who defaulted on their student loans and was discussed in a recent FPP seems different than the apparent fraud and damage caused by the for-profit colleges that have been investigated and successfully sued.

Also, the private loans obtained by students at for-profit colleges seem like an ongoing form of harm that still needs attention from policymakers, students who have experienced fraud, and their lawyers.

While the federal government already offers options to discharge student loans through Income-Based Repayment plans, Public Service Loan Forgiveness, disability and other discharge options (previously), as well as ways to get out of default, students at for-profit colleges also tend to have private loans that may not qualify for these options but are still difficult to discharge in bankruptcy.
posted by Little Dawn at 7:35 AM on June 9, 2015 [2 favorites]


Equating the value of a degree with how employers view it is almost always bad news for the humanities.

According to whom?
posted by mistersquid at 8:09 AM on June 9, 2015 [1 favorite]


The uber-scammy for-profit peers of Corinthian like Capella and NAU are definitely going the way of the dodo. What will be interesting is what happens to the semi-scammy, semi-respectable schools like Phoenix, ITT, and DeVry that do provide some value to students (but at a very high price). Their stock price has dropped more than 50% in the last 6 months, so the market has spoken... but those schools do have some friends in very high places including leaders in both parties, and they very well may worm their way out of this threat and survive in some form.
posted by miyabo at 8:42 AM on June 9, 2015 [3 favorites]


According to whom?

Humanities departments that get shut down for lack of students.
posted by BWA at 8:46 AM on June 9, 2015 [2 favorites]


It's tough to write a rule based on tuition and employment after graduation that distinguishes between sleazy for-profit schools and some of the lower-tier liberal arts colleges and HBCUs, which most reasonable people don't want to shut down.
posted by miyabo at 8:48 AM on June 9, 2015


Which is about $10k per student which does not seem to be a crushing debt or anything like a crisis demanding Federal intervention.

When you're working minimum wage, virtually any amount of debt is crushing.
posted by feckless fecal fear mongering at 9:21 AM on June 9, 2015 [5 favorites]


When you're working minimum wage, virtually any amount of debt is crushing.

5% annual interest on 10 grand is 500 bucks a year or about 42 dollars a month or about six hours of the U.S. Federal minimum wage. Less than one day a month. A burden? No doubt. A crushing debt that destroys any hope of a future? C'mon.
posted by three blind mice at 1:54 PM on June 9, 2015


When those 6 minimum wage hours may come in the only two shifts the employee receives that week (meaning 1/4 of 4th hair monthly income), ala Victoria's Secret employees?

I hope this applies to green card students. My roommate is in that boat and he's very worried about the thousands of dollars he spent at Anthem.
posted by thebotanyofsouls at 4:12 PM on June 9, 2015


Three blind mice, I'm not sure if that 10,000 dollar amount is actually correct. At a public university with a full tuition scholarship I still managed to net 15 000 in student loan debt over 4 years (Other expenditures I subtracted from my actual total of student loan debt) concidering I had no familial support that isn't bad.

The per credit hour cost is around 500 dollars. Assuming a general college course is 3 hours a class costs 1500. People completing a "degree" (128 hours or so) paid 64 000 dollars for that degree. Many people drop out after 1 class bringing down the average.
posted by AlexiaSky at 4:21 PM on June 9, 2015


Where there's a grift, there's a Bill not far off.....
http://www.marketwatch.com/story/bill-clinton-steps-down-from-post-at-for-profit-college-2015-04-24
posted by SteveLaudig at 4:30 PM on June 9, 2015 [1 favorite]


Coincidentally [WSJ]:
Various arms of the federal government have become more aggressive in pursuing for-profit schools for misrepresentations. Ashworth College, an online college based in Norcross, Ga., agreed late last month to settle Federal Trade Commission allegations that the school misrepresented how well it prepared students for certain vocational licenses and whether students could transfer credits from Ashworth to other schools.

Meanwhile, the Securities and Exchange Commission announced in May that it had brought fraud charges against ITT Educational Services Inc. and two of its top executives, alleging they misled investors about the financial prospects of some internal student-loan programs.
posted by Little Dawn at 7:06 PM on June 9, 2015


It's tough to write a rule based on tuition and employment after graduation that distinguishes between sleazy for-profit schools and some of the lower-tier liberal arts colleges and HBCUs, which most reasonable people don't want to shut down.

Not really. One quick rule on retention and graduation rates would sock the Corinthian ilk in the nose since they have far worse stats than reputable institutions. It's something that was discussed in recent years but the various bought & paid for politicians who take money from those scum fought it down.

Here's a piece from Kaplan's former marketing arm talking about the disparity in intake and repayment.
As a result, the 15 largest for-profits, which are publicly traded on Wall Street, receive an average of 86 percent of their revenues from the federal government.
...
To their credit, the for-profit schools take in primarily low-income and minority students, but many end up worse off than if they had never enrolled. Nearly all (94 percent) borrow to afford the steep tuition, typically double what public universities and colleges charge. Later on, even if they are among the 22 percent who manage to graduate, they have an extremely hard time finding jobs that permit them to repay their student loan debts, at a median level of $33,000.
...
Why has it been so hard to impose even minimal standards (e.g. requirements that at least 35 percent of for-profit college students make payments on their government subsidized loans if the college is to receive federal subsidies)? How do businesses like Kaplan (where only 27 percent of students made any payments on their outstanding loans) justify their existence?
There's several possible avenues there for regulation. Minimum graduation levels. Percentage of loan compared to school-granted need scholarships. Employment statistics.

Default statistics would do well. The law is now so amazingly punitive that you have to really want to not repay to not many any payments. That would be an excellent canary in the cole mine to indicate the worth of the education being subsidized by guarantees.
posted by phearlez at 1:36 PM on June 10, 2015


For-profit colleges aggressively target veterans for enrollment [WaPo]:
About 40 percent of G.I. Bill tuition benefits have gone to for-profit schools in the past five years.

Corinthian Colleges, the for-profit giant that filed for bankruptcy last month amid allegations of predatory lending and lying to the government about its programs, received $186 million in military tuition funding.
posted by Little Dawn at 5:19 PM on June 25, 2015 [1 favorite]


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