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Common Dreams reports
Corinthian Colleges, the for-profit education system that has come under fire for its predatory student loan schemes, said [April 26] it would shut down all of its 28 remaining campuses, roughly two weeks after the U.S. Department of Education announced it would fine the institution $30 million for misrepresentation regarding job placement rates.
[...]At its peak, the California-based company ran more than 120 colleges across the country with more than 110,000 students.
This final shutdown will displace about 16,000 students.
[...]Students whose campuses are closing may be eligible for closed-school loan discharges, [said Education Undersecretary Ted Mitchell]. "We will do everything we can to ensure that Corinthian makes good on its obligations to students and taxpayers to the extent possible. In addition, we encourage Corinthian students to pursue debt relief with their state".
However, some say that the Department of Education has yet to come through on those promises. As the National Consumer Law Center (NCLC) pointed out in February, the government gave funds to keep Corinthian afloat before it filed for bankruptcy, but gave no such help to the tens of thousands of students who were left without a degree and saddled with debt.
"There's widespread evidence they've engaged in years and years of deceiving students and taxpayers," NCLC attorney Robyn Smith told the Boston Globe at the time. "We're not seeing any relief for the students who've suffered the consequences."
Previous coverage on SoylentNews:
Update: Corinthian Colleges Fined $30M for Fraud
(Score: 5, Interesting) by bradley13 on Wednesday April 29 2015, @12:00PM
The big push for federal guarantees and loans started after I left college, but... My impression is that it was all marvelously well-intentioned. And like all such programs, the good intentions have paved the road to hell. Or, in this case, to debt peonage.
The federal program has created perverse incentives for colleges to chase federal money, instead of educating their students. As I understand it, Corinthian Colleges didn't have predatory loan schemes - it didn't lend its own money. It wanted students to get federally guaranteed loans, from whatever source, and then use those loans to pay an inflated tuition for an education of questionable quality.
Remove the federal involvement here, and you remove the ability of students to get loans for ridiculous amounts of money. Remove loans, and you remove the ability to charge inflated tuition. If students have to pay their own way, the college would have to cater to the students, instead of to the loan programs. Moreover, you could eliminate the vast swaths of administrators required to deal with the federal bureaucracy. That alone would to a lot to reduce tuition back to sensible levels.
This isn't pie-in-the-sky. This is how the whole system worked 35-40 years ago, when I started college. My parents paid my first year of college; I was able to pay my own way after that. Lots of students did, and graduated with no debt. You couldn't really get student loans; they were almost unheard of.
As the government started pushing it's loan-guarantee programs, and even started issuing loans directly, the chase for easy money began. Today, tuitions are more than 10x what they were then [usatoday.com] - even adjusted for inflation, that is a massive increase [topforeignstocks.com].
Is there any solution other than ending federal involvement in financing schools or individual students? That won't happen, of course. Instead, I expect to see increasing federal regulation of the schools, which will require ever larger adminstrative staffs, which will raise tuitions further and make the problem worse. But then, I'm a cynical libertarian...
Everyone is somebody else's weirdo.
(Score: 2) by VLM on Wednesday April 29 2015, @12:39PM
Around 1990 I qualified for some low income program as a military veteran or for some reason anyway, where there was a fund used like social security, pay as you go, what comes in, goes out, so they'd "loan" me $5K for the expensive uni but they guilt tripped grads that they can only make new loans as "we" repay them. Although they were pretty generous and it wasn't legally a loan as in cosigners but it was more than an outright gift and guilt trip. Anyway I paid them back about $10K because I liked them and I was a well paid software dev and you know how it is when you take a minimum wage kid and give him $60K/yr, at least for a little while.
They gave me a nice letter for the IRS for a $10K donation which might explain why I can't find anything about this anymore, I imagine the feds got pissed off.
From memory their business model was they'd "ruin" your credit record by reporting the loan as a debt you owe, but by the contract they couldn't go to collections or even demand repayment. So technically if you were a jerk and never wanted to buy a new car or house you could just stiff them. It was more than a mere alumni scholarship program.
Anyway that would be an interesting funding model for higher ed. Sure, dumbass school administrator (but I repeat myself), you can spend/charge $50K on paper, but you ain't getting that back for 20 years, if ever, and when the trust fund empties in 3 years you're screwed, hope you like ramen as much as grad students do. Or you can spend/charge $5K/yr and get it back in a couple years and loan it right back out, in perpetuity.
I have no memory of what this business model was called. It was an interesting business model, so I still remember it.
(Score: 2, Interesting) by Anonymous Coward on Wednesday April 29 2015, @01:54PM
"Is there any solution other than ending federal involvement in financing schools or individual students?"
I don't know, everywhere else in the world free education works and it's government handled, but you think it should be handled by free markets?
(Score: 3, Informative) by cafebabe on Wednesday April 29 2015, @11:14PM
In the US, educational debt now exceeds housing debt. Educational debt became a bigger bubble after it was exempted from bankruptcy proceedings. That is, anyone declaring themselves bankrupt still owes their student loans. Admittedly, a minority of students took courses with the intention of following it with a quick and cheap period of bankruptcy. However, the current situation now means that lending to an 18 year student is more certain than a self-certified mortgage. More worryingly, bankruptcy exemption is being copied by countries who wish to present an educated workforce to multi-national corporations.
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