Petition Calls For Loan Relief For Corinthian College Students

Ever since for-profit education chain Corinthian Colleges began its downward spiral last summer, consumer groups, students and legislators have urged the Department of Education to provide current and former students relief from student loans they took out to finance an education based on deceptive recruitment practices. Now that CCI has closed its remaining Everest University, Heald College and WyoTech campuses, consumer advocates say discharging federal student loans held by these students – and protecting students of other for-profit institutions – should be of immediate concern for the Department.

The National Consumer Law Center’s Student Loan Borrower Assistance Project started a petition that aims to ensure consumers receive the relief they deserve and that the Dept. of Education holds CCI and other for-profit colleges accountable for their use of misleading and deceptive efforts to enroll students and entice them to take out thousands of dollars in costly private and federal loans.

According to the petition [PDF], the Dept. of Education ignored its duty to protect Corinthian students despite multiple audits and government and state investigations having revealed widespread deception throughout CCI’s recruitment system, including the use of inflated job placement rates and graduation rates.

“The Department facilitated Corinthian’s sophisticated scheme to bilk thousands of low-income students of their dreams, while leaving taxpayers to foot the bill,” the petition states. “Now, the Department relentlessly pursues Corinthian borrowers for repayment of their federal loans. It has unjustly shifted the financial harm caused by its own mistakes onto the backs of students who are not at fault and who were deceived into taking out federal loans.”

For these reasons, the Department should provide immediate relief to all Corinthian students, the petition states.

Robyn Smith, an attorney working with the National Consumer Law Center, tells Consumerist that although many students who attended the CCI campuses that closed on Monday will be covered by closed school discharges, the petition aims to provide relief for all CCI students, even those who were enrolled or previously dropped out of the schools but were subject to the same deceptive practices.

While the “Corinthian 100” – hundreds of students who are refusing to pay their federal student loans in protest of the government’s support of the crumbling for-profit college chain – along with nine attorneys general and several legislators have asked the Dept. of Education to provide students relief from federal loans through a defenses to repayment mechanism, the NCLC’s petition instead urges an across the board relief system for affected students.

Under the defense of repayment option, the Department would provide loan relief to students on a case-by-case basis. However, that system could take a significant amount of time before students see any help, and that’s time they simply don’t have.

“We are asking the Department to set up a system to work with the attorneys general to provide widespread relief to all students throughout the country harmed by CCI,” Smith says.

The system would provide an automatic discharge of student loans without the student actually having to apply for the relief if that student’s school was part of state attorneys general investigations that found the campus engaged in deceptive recruitment practices.

Students that aren’t covered by evidence in current investigations wouldn’t be out of luck either. Smith says the petition suggests a simplified procedure to provide student relief, such as sending students a form that lists the deceptive practices that CCI relied on. If a student can testify under oath that those practices happened to them, they would receive the discharge.

Smith says a simplified, across-the-board system is more appropriate than the current case-by-case determination because most students don’t realize they might even qualify for relief.

“This is important because by requiring students to apply, many students don’t understand their rights or don’t get contacted,” she says. “Only six to seven percent of students have contacted the Department bout discharges in the past.

“We’re urging the Department not to implement heavy standards,” she says. “They shouldn’t be erecting barriers, but should be liberally providing relief.”

While the petition’s timing coincides perfectly with thousands of students left with large student loan bills after attending CCI schools, Smith says the NCLC’s mission is to help all students.

“The importance of this petition goes beyond Corinthian,” Smith says. “Corinthian isn’t the only college that has engaged in these deceptive practices.”

And so, the petition includes a section urging the Department to provide relief for students of any for-profit higher education institutions if state and federal investigations find violations.

“The Department should take aggressive and timely appropriate action when it knows that a school is violating state and federal laws,” Smith says. “The petition is important looking both at relief for Corinthian students and fixing some of the brokenness we have in the oversight relief systems.”

The petition from NCLC – which is collecting signatures from both individuals and organizations – will be presented to the Department of Education in early May.