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For-profit Higher Education
Corinthian Colleges’ announcement Sunday that it will close its remaining campuses has strengthened the resolve of student advocates and lawmakers calling for loan forgiveness. A half-dozen lawmakers including Sen. Richard Durbin (D-IL) and Sen. Elizabeth Warren (D-Mass.) asked the department and major federal loan servicers to ensure Corinthian students know their options for financial relief.
After years of government investigations, Corinthian Colleges Inc. will shut down more than two dozen of its remaining schools, displacing more than 10,000 California students. The move ends the turmoil at what was once one of the nation's largest for-profit college chains but presents fresh challenges to students, who now must seek transfers or federal loan forgiveness.
DeVry Education Group Inc. said its earnings fell 15% during the quarter ended in March and the for-profit educator also unveiled plans for the next phase of its turnaround plan for its namesake DeVry University division. DeVry said the plans include a focus on fewer markets and spending on its strongest local markets and programs. A spokesman said 14 DeVry University locations will become online only under the revamp plan.
The New York Times Editorial Board writes: Over the last 20 years, the Department of Education has received only a handful of requests from borrowers seeking to escape repayment on grounds of wrongdoing by schools. Evaluating many such requests will be difficult. But the evidence shows that such a system is needed and that relief is long overdue.
The U.S. Department of Education on Tuesday fined Corinthian Colleges nearly $30 million for misrepresenting job placement rates at its Heald College chain, which officials said the troubled for-profit education company must now begin the process of closing.
California Atty. Gen. Kamala D. Harris is calling on the federal government to forgive student loan debt for thousands of students who enrolled at schools run by Santa Ana-based Corinthian Colleges Inc.
Eileen Connor writes: In a deal that purported to disclaim any successor liability for Corinthian's student-directed misdeeds, the Department infused the school with cash to prevent a sudden shut down of operations, allowed for ongoing student enrollment, and brokered the sale of many Corinthian Campuses to ECMC, a collector of student loans. This bailout and controlled unwinding of Corinthian is unusual, but its effect is not unprecedented in one key respect. The Department has evidenced no intention to go back over its books and relieve debt obligations that never should have been issued, had Corinthian played by the rules.
Parents considering whether to borrow to pay for their children’s college are about to have more options, as Citizens Bank rolls out a loan with a lower interest than the government offers.
Jeff Bryant writes: An alphabet soup of new financial vehicles – SLABS, CABS, PPPs, ISAs – that’s been created in the edu-debt sphere spells disaster, as Wall Street tightens its control of how – or even whether – the nation educates its future workers and citizens.
After a recent government crackdown on the multibillion-dollar career-training industry, stricter limits on student aid and devastating publicity about students hobbled by debt and useless credentials, some for-profit schools simply shut down. But a few others have moved to drop out of the for-profit business altogether, in favor of a more traditional approach to running a higher education institution. And the nonprofit sector, it turns out, can still be quite profitable.