The Department has long known that Corinthian Colleges posed a grave risk to its students and to taxpayers. In November 2012, the Department determined that Corinthian failed to earn a minimum financial responsibility score. In addition, since 2007 Corinthian has been the target of a number of state attorneys general investigations and actions involving alleged deceptive recruitment practices. Although we supported the Department’s decision to impose a 21-day federal financial aid hold on Corinthian, we believe the Department and state oversight agencies could have done much more, much sooner, to protect Corinthian students. Their failure to do so has led to the current situation that could impact over 72,000 students.
We are dismayed by the Department’s subsequent decision to allow Corinthian to draw down 16 million dollars. We are concerned that the Department’s primary focus is protecting the federal government’s investment, rather than protecting the people who are least responsible for this situation – the students.
The Department, for example, has allowed Corinthian to continue enrolling students without requiring that Corinthian provide any notice to those students about potential school closures or buy-outs. It is outrageous that investors have received notice, while students have not. We applaud California Attorney General Kamala Harris’ recent decision to put students first by seeking an injunction requiring Corinthian to provide students with this information.
Today we sent a letter to Secretary Arne Duncan , urging him to put students’ needs first. Students should not have to pay for the mistakes of Corinthian, the Department or state for-profit school regulators. We asked the Secretary to implement ten specific measures in order to protect students in the event of school and program closures, teach-outs, and buy-outs. We requested that the Department be cautious about approving teach-outs or buy-outs, as these may lead to Corinthian students being harmed by a second for-profit school. We also asked the Department to provide full federal loan discharges for distance education and brick-and-mortar students whose programs are discontinued by new owners. In addition, because students whose schools are sold should not be forced to complete their programs with new owners, we asked the Department to grant them the option of full federal loan discharges.
We also requested that the Department require Corinthian to fund legal services for impacted students, cease enrolling new students, provide information regarding the likelihood of buy-outs and closures to current students, and cancel or pay-off closed school students’ private student loans. Finally, we asked the Department to ensure that no Corinthian executives receive compensation before students and taxpayers are fully compensated for their losses. Any other agreement would be unacceptable.