Will absolving the debt of the Corinthian 100 set a bad precedent?
The case of the Corinthian 100 is a curious one. Since Corinthian Colleges shutdown at the end of April due to financial problems, a group of students have been battling with the United States Department of Education to have their student loans declared as junk.
The students feel that they were defrauded by Corinthian and shouldn’t have to pay a single dime of their loans back. Corinthian was a part of a for-profit culture that gave higher education a bad name. At least the for-profit section of it.
According to Corinthian’s financial records, the institution received nearly 80% of its revenue from the federal government. Meaning the vast majority of its profit came from student loans.
The government began to investigate Corinthian because students claimed that the degrees they received weren’t being recognized by employers and they couldn’t find jobs. They also found that Corinthian was telling students to lie on their financial aid applications.
Soon after, Corinthian was fined $30 million by the federal government for “misrepresenting job placement rates,” effectively shutting the company down.
Caught in the after burn are students who have taken out loans but did not receive a viable education in return.
So, born is the Corinthian 100 and their fight to have their student loans absolved. But according to the Department of Education, the law that may allow students to have their loans discharged is murky.
Secretary of Education, Arne Duncan, told The Chronicle of Higher Education that the rules aren’t clear on what they’re allowed to do.
“We don’t have a lot of practice in this,” Duncan said.
So instead of getting rid of the loans for the group as a whole, the education department is “leaning toward a case-by-case process.” In essence, each individual would have to stage a fight to have their loan cleared.
The department is afraid that by easing the loans of all students involved with the Corinthian 100 that it would set a precedent for more students to do the same.
I guess they’re afraid of an avalanche turning into a never ending waterfall. While I don’t believe that will happen, this rule is there to make it easier for students who feel defrauded by their institution of choice to have their loans at least reviewed.
If anything the federal government should have done more to protect students from the predatory practices of for-profit institutions. So many of them have inflated tuition prices and go after low-income students with promises of job placement upon graduation.
For some that hasn’t happened, which is why many students who attend for-profit institutions are watching what happens with the Corinthian 100 carefully.
Setting a bad precedent isn’t what should concern the Department of Education. It’s properly protecting students who are attempting to better their lives by attaining a college degree.
Regulate for-profit schools and issues of this nature will not appear in the future.