The Systematic Ripping Off Of College Students-- Who's To Blame?

Private, for-profit "colleges" have spent a great deal of money-- and they get a great deal of tax-payer money-- bribing Members of Congress to cut them some slack on their shoddy operations. Last cycle alone, for-profit education spent $1,727,926 on legalistic bribes to Members of Congress, $1,143,883 to Republicans and $582,043 to mostly conservative Democrats. The two biggest recipients of legalistic bribes were the top two Republicans on the Education and Workforce Committee, Chairman John Kline (R-MN) and North Carolina crackpot Virginia Foxx. Kline scooped up $185,849, and Foxx walked away with $88,880. Other crooked House Members the fake colleges found amenable to their bribes were Alcee Hastings (D-FL), John Boehner (R-OH), Matt Salmon (R-AZ), Jeff Miller (R-FL), Donald Norcross (D-NJ) and Kyrsten Sinema (Blue Dog-AZ).

This week, the NYTimes blasted a headline that claimed the Department of Education is forgiving student loans from one of the worst offending fake colleges, Corinthian. But the Times wasn't paying close enough attention to the fine print-- which was just fine with Department of Education Secretary Arne Duncan. If you only read the first two paragraphs, you got this:

In a move against what he called “the ethics of payday lending” in higher education, Secretary of Education Arne Duncan announced Monday that the Education Department would forgive the federal loans of tens of thousands of students who attended Corinthian Colleges, a for-profit college company that closed and filed for bankruptcy last month, amid widespread charges of fraud.

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.

Farther down, though, things seemed less sanguine for the defrauded students:

Many advocacy groups said the department’s plan did not go nearly far enough to ensure real relief for defrauded debtors.

“Each student is still going to find out about it, and apply, and it’s a complex process,” said Luke Herrine, a member of the Debt Collective, which organized a debt strike by Corinthian students, the first of its kind. “There’s no reason why they couldn’t have given blanket relief to some of these groups of students.”

Student loan debt is over $1.2 trillion, more than double the amount of a decade ago. Forty million Americans have outstanding student loans.

For-profit colleges typically get the vast majority of their revenue from federal student loans, and account for nearly half of the defaults on these loans. Many of these colleges have been criticized for spending more on marketing and recruitment than on instruction.

Founded in 1995, Corinthian became one of the country’s largest for-profit education companies, buying up struggling vocational colleges across the country. It formerly had more than 110,000 students at 100 Heald, Everest and Wyotech campuses nationwide.

...Under the department’s new plan, Corinthian students whose colleges were not closed would apply for debt relief under a provision of law-- the defense to repayment-- that has been used only a handful of times in the last two decades.

The department said the special master would be charged with developing a simple streamlined system for Corinthian students to make their case, and developing “a broader system that will support students at other institutions who believe they have a defense to repayment.”

When Corinthian filed for bankruptcy in May, it had $143 million in debt and less than $20 million in assets. Its chairman, Jack D. Massimino, had a compensation package worth more than $3 million in 2013.

Many progressive Democrats were happy to see Duncan make a move-- but not happy he had moved so little. "Yesterday," said Progressive Caucus co-chair Raul Grijalva (D-AZ), "the Department of Education took the first step in providing relief for student debt resulting from the Corinthian College for-profit scheme. I am glad to see progress in helping some students who are now unfairly burdened with debt for an education they never received, but I urge the department to take their actions further and ensure all students who are in a similar situation receive relief from these deceptive practices of for-profit schools. We have an obligation to ensure no one is unfairly burdened from these schemes, and we must live up to that commitment." His co-chair, Keith Ellison (D-MN), took a similar position: "The Department of Education’s announcement is a good first step, but the process to get debt-relief will be very difficult for students who were ripped off by Corinthian. The Progressive Caucus urged Secretary Duncan to issue automatic and class-wide discharge of debt for students. Instead, the Department of Education placed the burden of proof on individuals. The Progressive Caucus will keep pushing for a better deal for students."

The Debt Collective, tireless activists for education reform, went even further than Members of Congress.

Just as Corinthian Colleges portrayed its programs as a path to a better life when they were in fact debt traps, the Department of Education is portraying a process that re-victimizes students as a solution to a problem they created.

If the Education Secretary was truly “committed to making sure students receive every penny of relief they are entitled to under law” he would sign the “Order for Discharge of Federal Student Loan Debts” the Debt Collective sent him last week, immediately and automatically discharging Corinthian students' debts. Students are entitled to receive full relief under law. The legal and most painless possible process for students is no process—they deserve an automatic discharge of their debts.

The Department of Education has been misusing taxpayer dollars for decades, funding up to 90% of Corinthian and other exploitative for-profit college chains. Hundreds of thousands of students were led into a debt trap funded by tax dollars. Automatic, class-wide discharges are not only just, they would also serve as a corrective for the Department's flagrant failures to allocate public funds wisely. An automatic, class-wide discharge for defrauded Corinthian students would not cost taxpayers, as it would be offset by government profits on the student loan program.

In place of this obvious option, the Department's "solution" is a bureaucratically tortured process designed to provide relief only to those who hear about it and can figure out how to navigate unnecessary red tape.

In response to government inaction in the face of systemic corruption, 1,233 people from across the county who attended a variety of schools (for-profit, public, and private non-profit institutions) have pledged to stand in solidarity with Corinthian students and strike their own student loans should Department of Education continue to fail to meet its moral and legal responsibilities.

The strike began February 19 when 15 graduates of Corinthian said they would no longer make payments on their federal loans. They've been joined by 200 more Corinthian students and ex-students and over 1,000 graduates from other colleges.

Elizabeth Warren, addressing the American Federation of Teachers, pointed out this week that the messed-up education system is not just the fault of one party, but of both. "It starts with courage-- the courage of both Democrats and Republicans to admit how much is wrong and that the other side has a real point. We can do it if Republicans admit that we will never have affordable college without investing more resources in education, and if Democrats admit that we will never have affordable college without demanding real accountability in exchange for those investments."

An NYU graduate from 2013, Alex Law-- who's running for the House seat in New Jersey's First Congressional District (Camden, Cherry Hill and the suburbs and communities east on Philly)-- is likely to be the Member of Congress most in touch with this issue. Fortunately for him, NYU doesn't engage in these fraudulent practices. Many other students from NJ-01 weren't so lucky. He told us:

Student loan reform is one of the issues closest to my heart because kids are being taken advantage of by predatory lending that affects them for the rest of their lives. The government's job is to make sure everyone in America has a fair shot, that our society isn't for the rich and by the rich. These fraudulent for-profit colleges that are often unregulated are especially terrible because they prey on the poor. The previous and current Representatives from my district, Rob Andrews and Donald Norcross, have shamefully taken hundreds of thousands of dollars from these 'schools' to quietly prevent regulation of this industry. Mr. Norcross seems to think he can do this because those getting taken advantage of have no organized voice, but as progressives we must fight back. We must take action to prevent other colleges like Corinthian from stealing our future. When elected, I will do everything I can for this issue.

And if you'd like to help make sure Alex replaces Norcross, we have an ActBlue page for that.