Corinthian Collapse Renews Calls for Loan Forgiveness

Student advocates and lawmakers are renewing calls for loan forgiveness after Corinthian Colleges’ announcement Sunday that it will close its remaining campuses. 

Corinthian on Monday did not reopen 28 campuses enrolling 16,000 students. The company declined to comment beyond a press release. 

Lawmakers including Sen. Dick Durbin (D-Ill.) and Sen. Elizabeth Warren (D-Mass.), in wake of the closings, asked the Department of Education and major federal loan servicers to ensure Corinthian students know their options for financial relief. 

"Finally, we see the end of this rotten company but there are still thousands of students who may never see the end of the damage Corinthian has caused if the Department of Education doesn’t move quickly to provide some relief," Sen. Dick Durbin (D-Ill.) said.

The closings mark a quick end to what had been a steady dismantling of one of the country’s largest for-profit schools. Corinthian's network of for-profit schools once included 100 campuses across the U.S., with about 74,000 students were enrolled. 

But last summer the Education Department intervened in the company’s operations, cutting off Corinthian’s access to federal student loans without which it could not survive. It was an unprecedented move that followed allegations that Corinthian falsified graduation statistics, inflated job numbers and abused the student lending process. Since then the school has been winding down its operations.  

The government previously struck a deal with ECMC Group, allowing the student debt guarantor to acquire some of Corinthian's campuses. ECMC then agreed to wipe out $480 million in debt to avoid any liability for Corinthian's alleged illegal activity.   

Corinthian since then has been trying to sell its remaining campuses to no avail.

Pressure from lawmakers and student advocates to help Corinthian students has been building. Senate Democrats have pointed out that the Education Department must offer to discharge loans when institutions shut down.

Just last week, House lawmakers asked Education Secretary Arne Duncan to forgive the debt of current and former Corinthian students. Another 20 senators pointed to Corinthian’s collapse as reason to publish federal financial aid sources under the 90-10 rule, which allows no more than 90% of for-profit colleges’ revenue to come from federal student aid.

In a blog post, Education Undersecretary Ted Mitchell encouraged Corinthian students to pursue debt relief with their states. Students whose schools closed may be eligible for loan discharges, he said.

Mitchell also said the department is working with state community college systems to ensure that students can continue studying.