Attorneys General Coalition Urges Dept. Of Education To Clarify Corinthian Students’ Options

A week after nine senators urged the Department of Education to provide support to the thousands of students affected by the closure of now-bankrupt Corinthian Colleges schools — Everest University, Heald College, and WyoTech — the top prosecutors in 11 states are adding their voices to the chorus encouraging the Dept. to protect students and clarity their options following the company’s final downfall.

A coalition of 11 state Attorneys General, led by Kentucky AG Jack Conway, sent a letter [PDF] to Education Secretary Arne Duncan on Wednesday conveying their unease with information the Dept. has provided to now-former CCI students.

Conway was joined by his fellow AGs from Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Mexico, New York and Oregon. They are part of a 37-state working group reviewing the troubling practices of some for-profit colleges.

In the letter, the attorneys general say they have joined Illinois Senator Dick Durbin in expressing serious concern over the Department’s decision to include several for-profit colleges currently under federal and/or state investigation as viable transfer opportunities for students affected by CCI’s closure.

Attorney General Conway – whose office has filed lawsuits against for-profit colleges for allegedly misleading students, misreporting student loan default rates or placement rates, and questionable lending practices – says in a statement that the Department’s action so far has been troubling.

“These students have already been through a stressful time with the closure of a school, and the last thing they need is to end up at institutions that are more interested in getting their hands on student loan dollars than they are in educating students,” he said. “When something bad happens – the students are left holding the bag with tens of thousands of dollars in debt, no degree and credits that won’t transfer.”

As Durbin pointed out last month, after CCI announced the closure of its final 28 campuses, the Dept. of Education updated its frequently asked questions page on the for-profit chain, advising students who wish to continue their program that they may be able to do so by transferring to a new school.

“If you do transfer into a comparable program offered by another school, that school will evaluate your Corinthian course work and will decide whether to give you credit for the work already completed, and what courses you need to take to complete your program of study,” the Department states, while providing a list of possible transfer options.

However, the lists – which allows students to view their specific school and other local schools with similar programs of study – includes a number of schools that are on the Department of Education’s Heightened Cash Monitoring list and party to investigations for similar unfair practices that CCI allegedly participated in.

Schools offered as options include: ITT Technical Institute, DeVry University, University of Phoenix, The Arts Institutes, Argosy, Le Cordon Bleu and International Academy of Design and Technology.

“By steering unknowing Corinthian students toward these for-profit schools, the Department of Education is setting the students up for the distinct possibility that they will incur substantial additional loans only to be the victims of illegal lending, recruiting, or other practices and faced with yet another college closure,” the letter states.

The group asks Duncan to remove the schools from its website as transfer options and refrain from providing other guidance to vulnerable students encouraging them to consider these schools.

The list of questionable transfer options wasn’t the only issue the group of AGs addressed in their letter.

They also asked for clear and immediate guidance for Corinthian students, including a warning that if they transfer to another school, they will not be eligible for the option of a closed school discharge of their student loans.

And so, the group requested that the Dept. mail discharge applications to all Corinthian students that may be eligible for loan forgiveness.

“We further join Senator Durbin in urging the Department of Education to provide meaningful debt relief to all students who were the victims of Corinthian’s fraud,” the letter states.

When it comes to borrowers who do not qualify for loan forgiveness under the federal closed school discharge, the groups says those former students should be able to cite CCI’s fraud as a reason to qualify for defense to repayment.

Under the defense of repayment option, the Dept. would provide loan relief to students on a case-by-case basis. However, as the National Consumer Law Center pointed out earlier this month in a petition, that system could take a significant amount of time before students see any help, and that’s time they simply don’t have.

Instead, consumer advocates, students, as well as state regulators and several legislators, believe the Dept. should create a system that would 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.

In either case, the attorneys general coalition believes the Dept. needs to provide “clear guidance to all such students on how to assert a claim for relief.”

Attorney General Conway and 11 colleagues write letter to U.S. Education Secretary [Sen. Dick Durbin] [Attorney General Jack Conway] [Attorney General Eric Schneiderman]