It’s not everyday that a higher education institution shuts down or announces it might be sold. But for the thousands of students attending Corinthian College Inc. (CCI) schools — like Everest University, WyoTech, or Heald College –– that’s their new reality, and it’s one that leaves more questions than answers.
Earlier this month CCI reached a deal with the Dept. of Education that included closing or selling nearly 100 campuses across the country over the next several months.
While we’re still waiting for all of the details to be hammered out, we do know that CCI plans to sell off its Heald College campuses in California, and close Everest University campus in 11 states.
For many of us that news has little impact, but for the 72,000 students who are currently working toward degrees degrees at CCI schools, it leaves their education and more than $1 billion in student loan debt hanging in the balance.
The operating agreement [PDF] between CCI and the Department includes a provision describing the options the schools have regarding current, and even some former, students.
Closed School Discharge
If a student attends a school slated for closure, or if that student withdrew within 120 days of the school closing, they may be entitled to a closed school discharge.
This means that the student would have no further obligation to repay their Direct Loans, Federal Family Education Loan (FFEL) Program loans (which include Stafford and PLUS loans), or Perkins Loans.
If a student used private student loans to finance their education and their school closes, they are generally responsible for repaying that debt.
However, Robyn Smith, Of Counsel for the National Consumer Law Center, says there may be options for those students.
“Students might have a right to full or partial discharge of private loans depending on the terms of the loans and state laws,” Smith says. “Some states issue recovery funds to repay private loans if the school closes.”
The Consumer Financial Protection Bureau describes “teach-out” as an arrangement in which students may be able to complete their program and receive their degree at their current school or at a comparable institution.
It’s still unclear which schools will be doing teach-out, but there is a high probability that at least some schools will go this route.
Each student will be required to meet with the director of education at their campus before it can be decided if the student is required to finish their program or entitled to a full refund of their direct costs such as tuition, fees and other education-related expenses paid directly to Corinthian.
Students who enrolled at a Corinthian campus after June 23 can choose between receiving a refund or participating in a teach-out.
But students who were enrolled before June 23 have few options as Corinthian will be making the decision for them.
“If that’s the case they can appeal the decision to Corinthian, but it doesn’t appear that the Department will be able to overrule that decision,” Smith says.
So, if Corinthian decides a student should be in teach-out are they stuck working toward a degree that may have little value or recognition in the future? Not necessarily.
In some instances students may be able to withdraw and apply for a refund. However, the amount would vary depending on how far along the student is in their program. If a student completed 60% or less of their term, they may be entitled to a refund for the potion of the federal loan that was not used.
Both Teach-Outs and Closed School Discharges
In the case that Corinthian provides the teach-out itself, students are stuck.
But if another school provides the program students should have the right to opt out and seek a full discharge of their federal loans.
Students that opt to participate in a teach-out may withdraw for any reason before completing the program and still qualify for a full discharge of their federal student loans.
Students who decides to transfer credits and complete their education at another school will not qualify for a discharge, Smith says.
If Corinthian Sells Your School
Students at Corinthian schools that are being put up for sale have very few options.
These students do not have a right for a refund or a closed school discharge under the operating agreement between CCI and the Department.
The same would be true if the new owner discontinues a program before a student can complete their degree.
However, if Corinthian can not sell the school and the campus closes, students may be eligible for a discharge. Additionally, students who withdrew from the school 120 days before the school closure will also qualify for a closed school discharge.
In some cases the Department can extend the 120 day period for “exceptional circumstances,” but students must be able to prove the quality of their education deteriorated before they withdrew.
In order to provide sufficient evidence that the education quality deteriorated at their campus, Smith recommends that current Corinthian students document every thing they witness on campus.
“Right now students should be documenting strange things like teachers not showing up, schools being closed for the day, or equipment not working,” Smith says.
In the documentation, students should include the names of Corinthian employees they interact with or witness engaging in odd behavior and the dates they witnessed these unusual events.
If a student decides to withdraw from the school before it closes, Smith recommends that the student covers his or her tracks with detailed documentation.
“Write that they are dropping out and take it to the school, remember the person they gave it to and keep good records of that,” she says.
Students should also network with their peers in order to provide accurate depictions of a school’s quality of education.
“Get each other’s phone numbers and addresses. Each of their individual stories and testimonies will corroborate stories,” she says. “It’s important to network with others to support these applications.”
Additionally, students need to share their experiences with state attorneys general and their legislative representatives.
“If they see things going on, like newly enrolled students trying to withdraw or cancel – some states have laws,” she says. “If they are lied to about their rights to a refund or being pressured to enroll, they should file a complaint. It’s the only way the attorney general or state agencies will know what’s going on at Corinthian.”
Watch Out For Other Schools Trying To Pick Up The Pieces
After hearing the horror stories from many former Corinthian students, it would seem unlikely that they’re willing to jump into similar situations at other for-profit colleges, but there’s always that possibility.
Smith warns students to be leery of other for-profit colleges that may market their services.
“A lot of times when a school closes another for-profit will market heavily,” she says. “They’ll say we can help you, but be very careful about enrolling in another for-profit school.”
If a student does decide to attend another for-profit school, Smith suggests getting all of the terms in writing, especially if the school promised to allow credits to transfer.