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For-profit Higher Education
David Halperin writes: The big for-profit colleges were back in court in Washington again this morning, arguing to a federal judge that the Obama Administration did not have the power to subject them to even the most minimal standards of accountability for leaving their students with overwhelming debt.
Axact does sell some software applications. But according to former insiders, company records and a detailed analysis of its websites, Axact’s main business has been to take the centuries-old scam of selling fake academic degrees and turn it into an Internet-era scheme on a global scale.
The nation’s top consumer watchdog is stepping up its oversight of student-loan servicers, the agency announced on Thursday. The Consumer Financial Protection Bureau, which has been monitoring the sector since last March, said it would seek information on practices that "create repayment challenges" or set up "hurdles for distressed borrowers." The agency is also interested in "economic incentives that may affect the quality of service" provided to borrowers, it said in a statement.
The U.S. Securities and Exchange Commission levied fraud allegations Tuesday against a major for-profit college company, accusing ITT Educational Services Inc. of hiding the “extraordinary failure” of two student loan programs from investors.
The dramatic collapse of Corinthian Colleges isn’t the only shake-up happening in for-profit higher education, as a broad swath of the sector is shutting down or selling off campuses after years of declining revenue and enrollment. On Wednesday two of the largest publicly traded for-profits announced substantial cuts: Education Management Corporation (EDMC) said it would gradually phase out 15 of 52 campus locations of the Art Institutes, while Career Education Corp. unveiled a broader restructuring, saying it will close or sell everything but its Colorado Technical University and American InterContinental University holdings.
This week, the National Consumer Law Center published a denial letter received by an unnamed borrower also represented by the New York legal group. Except the denial wasn’t from one of the Education Department’s heavily criticized loan contractors; it was from the department itself. In it, the department’s Default Resolution Group told the borrower that she is responsible for repaying the debt despite her claims. There’s no mention of the evidence she provided to support her claim, or her references to state and federal law. Dwight Vigna leads the Education Department’s default group, which government investigators have routinely criticized.
On Wednesday two of the largest publicly traded for-profits announced substantial cuts. Education Management Corporation (EDMC) said it would gradually phase out 15 of 52 campus locations of the Art Institutes, which is one of the better known brands among for-profits. Roughly 5,400 students attend the closing campuses.
Loan relief for students could cost taxpayers millions of dollars, and establish a precedent for other students unhappy with their college degree. Who deserves debt forgiveness when for-profit colleges close or are accused of fraud?
The unprecedented collapse and now bankruptcy of Corinthian Colleges has left in its wake a large political battle over student debt relief. At the center of the storm is the U.S. Department of Education, which is now deciding how to structure a debt relief process. Its decisions are likely to have long-term implications for student loan borrowers regardless of whether they attended Corinthian institutions. Here’s an explanation of some of the moving parts to Education Department debt relief.
Corinthian Colleges’ declaration of bankruptcy on Monday finalizes the for-profit college’s unprecedented collapse that has morphed into a political firestorm for the Obama administration -- which U.S. Department of Education officials are racing to extinguish.