Corinthian Colleges, Inc., a for-profit network of colleges, is basically the higher education equivalent of your friend's shady drug dealer.

The Department of Education’s shit finally hit the fan this past Monday. Hard pressed for change from former Corinthian College students, the department finally ran out of excuses and announced its push for debt relief for victimized students, aptly named “the forgiveness push.” As in, “Please forgive us for sucking, and to convince you, we’ll forgive your student loan debt.”

First, some background. Corinthian Colleges, Inc., a for-profit network of colleges, is basically the higher education equivalent of your friend’s shady drug dealer. The network filed for bankruptcy this past May after years of state and federal investigations culminated in fraud and deception charges. Think, luring desperate students with ruthless marketing tactics, lying to students about job opportunities and ultimately running a “predatory lending scheme.”

Corinthian’s colleges, branded as Heald, WyoTech and Everest, have slowly closed their doors across the country, leaving approximately 350,000 students deep in $3.5 billion worth of outstanding student loan debt without a reputable college degree to show for it. This injustice sparked a Corinthian student-led “debt strike,” which, to the shock of many, sparked actual change.

“[The administration] is determined to crack down on colleges that leave students with huge debt, worthless degrees and few job prospects,” announced Department of Education Secretary Arne Duncan in a conference call with reporters. “This is our first major action on this but obviously it won’t be the last.”

The student debt forgiveness plan aims to crack down on sketchy for-profit colleges, which, according to the Wall Street Journal, “represents a small share of higher education but a large share of student-loan defaults.” Fail. In the long run, the department plans to allow any student that has been defrauded by their college to forgive their student loans.

The Plan

A plan of this scale requires a newly appointed “special master,” who will be tasked with streamlining the complex debt relief process within the Department of Education. The strategy thus far? Divide and conquer.

Students have been split into two groups: those who attended a school that close and those who attended a school that was sold off.

  • For the former, students will be able to have their debt forgiven if they dropped out any time after June 2014 (which is when Corinthian began selling off their colleges). This is a lengthy extension from the original “120-days prior” mandate.
  • Students whose colleges weren’t closed will be permitted to apply for debt relief under the Defense of Repayment statute, which allows students to explain how the school in question had wronged them. They even created an app for it.

The special master will first focus on Corinthian students, but will expand their efforts to victimized students from other institutions who believe they’re entitled to loan relief.

Our Take

First and foremost, we’re always on the students’ side. But, there’s no denying that this necessary initiative will be expensive. If the department achieves its end goal of relieving all 350,000 Corinthian students’ debt, we’re looking at a $3.5 billion bill. This financial burden will fall not on the perpetrator, but on the taxpayer. *Head explodes.*

“Students have been hurt, but the department is establishing a precedent that puts taxpayers on the hook for what a college may have done,” explained Senator Lamar Alexander, Republican of Tennessee and chairman of the Health, Education, Labor and Pensions Committee in an interview with the New York Times. “If your car is a lemon you don’t sue the bank that made the auto loan; you sue the car company.”

We can’t help but agree. This is an issue worthy of attention and action, but one that also unearths deep-seated flaws within our government and higher education system. Once again, the layperson falls victim to a larger governing body designed to help them.

What do you think of the debt relief plan? Share your story in the comments below or join the discussion on Facebook.

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Posted 06.10.2015 - 07:00 pm EST