The letter — written by Sens. Dick Durbin (IL), Tom Harkin (IA), Barbara Boxer (CA), Sherrod Brown (OH), Jack Reed (RI), Elizabeth Warren (MA), Bill Nelson (FL), Richard Blumenthal (CT), Brian Schatz (HI), Chris Murphy (CT), Ed Markey (MA) and Mazie Hirono (HI) and addressed to Education Secretary Arne Duncan — expresses concern about allowing Corinthian to bring on new students when the company is the subject of probes by four federal agencies and at least 20 state attorneys general for its marketing practices, loan application processes, and questionable job-placement claims.
“Corinthian has shown itself to be one of the worst actors in the for-profit college industry,” write the Senators. “[W]e must not let students be held responsible for the bad actions of this company.”
In addition to putting a stop to enrolling new students, the lawmakers call on Education to require that Corinthian “fully inform students of the company’s intentions related to the sale or closure of specific campuses.”
And if Corinthian wants to continue getting any the more than $1 billion/year in federal student aid that it’s been receiving, the Senators want the company to certify that it will not enforce mandatory arbitration clauses to prevent wronged students from seeking legal claims against the company.
The recently announced deal between Corinthian and Education allows for the eventual sale of a number of the company’s campuses. But, given the number of other for-profit college operators also under regulators’ microscopes, the Senators are worried that CCI may just be handing these schools over to another company facing similar problems.
That’s why the letter asks Education to prevent Corinthian from selling campuses to other companies that are under federal or state investigation. It also wants the prohibition on binding arbitration to be extended to any business that purchases a Corinthian school.
The Senators conclude with a barrage of questions about Education’s deal with Corinthian, like when will Corinthian decide which campuses to sell, what options are going to be given to students at sold and phased-out campuses, how will online-only students be affected, and what relief will there be for students who have taken out private student loans?
Here is the full text of the letter sent by the Senators to Secretary Duncan:
[We] write to ensure that the Department of Education is doing everything it can to protect students who will be displaced or disadvantaged as a result of the impending sale or closure of Corinthian College Incorporated’s campuses nationwide. Over the past several years we have seen multiple examples of abrupt school closures that have left students in the lurch, scrambling to continue their education or discharge their loans. Corinthian College Incorporated represents a risk to students on a scale that could overwhelm the current system of support and safety net provisions for students.
Corinthian has shown itself to be one of the worst actors in the for-profit college industry – under investigation by four additional federal agencies and more than 20 State Attorneys General. It is important that the Department continue to hold Corinthian accountable for its actions, but we must not let students be held responsible for the bad actions of this company. As such, we urge the Department to:
• Immediately prohibit Corinthian from enrolling any new students.
• Require Corinthian to fully inform students of the company’s intentions related to the sale or closure of specific campuses.
• Prohibit any for-profit company or school that is under federal or state investigation from purchasing or participating in teach-out processes of any Corinthian campuses.
• Require, as a condition of receiving continued federal funding, that Corinthian certify that it will not seek to enforce mandatory arbitration clauses that preclude students who have been harmed by Corinthian’s misconduct from seeking relief in the forum of the students’ choice, and prohibit any entity that the Department permits to purchase a Corinthian school or carry out a teach-out plan from including such clauses in their enrollment agreements.
In addition, we request answers to the following questions:
• When will Corinthian Colleges designate which campuses it intends to sell and which will close?
• Do students at closing campuses have the option to refuse a planned teach-out and instead seek Closed School Discharge? If so, how will the Department ensure students are properly notified of their options?
• What process exists for borrowers who do not qualify for the Closed School Discharge to bring claims to the Department that the school’s potential violations of the law are a defense to repayment? Will individual borrowers have to bring separate actions for such an option or will all borrowers subjected to the same improprieties be granted relief? Will this process be extended to all borrowers regardless of payment status?
• If a Corinthian school is purchased and the new owner closes programs, but maintains the campus, what relief will the Department provide or require to be provided to those students ?
• How will students enrolled in online-only programs be dealt with?
• How will the Department seek to ensure relief for Corinthian students with private student loan debt?
We request a prompt response to each of these requested actions and questions. Thank you for your work to hold for-profit colleges, like Corinthian, accountable. We encourage you to continue conducting aggressive oversight of this industry.