The "Corinthian 100" Of Corinthian Colleges Are Flat-Out Refusing To Pay Back Their Student Loans
More than 100 students are refusing to pay back their student loans to protest a for-profit company they claim misled them into taking on hefty debt for degrees and coursework that ended up, they say, being worthless. What began simply with 15 individuals and a public statement calling upon the Department of Education to void their federal student loans has ballooned to more than 100 former students of the for-profit colleges run by Corinthian Colleges, which has shuttered more than half of its campuses nationwide over the past year. On Tuesday, an assortment of activists sat down with the Consumer Finance Protection Bureau and an official from the Department of Education to discuss their debt.
Calling themselves the Corinthian 100, the activists are spearheaded by the Debt Collective, an offshoot from Occupy Wall Street that has targeted the growing student debt crisis. More broadly, the Debt Collective hopes to dismantle a higher education system that allegedly forces lower income individuals to pay large amounts of tuition without the guarantee that the degree will turn into gainful employment.
The group began to recruit students with staggering debt to participate in a strike action earlier this year, and, according to the group, received hundreds of emails from indebted students and graduates of Corinthian Colleges’ institutions.
Refusing to pay student loans, however, poses serious consequences, including flattened credit ratings, lower tax refunds and poorer job prospects. So each strike participant was walked through the ramifications before committing to the action, Debt Collective director Ann Larson told Market Watch.
“This is a historic strike,” Larson continued. “Officials in Washington recognize that.”
The Consumer Finance Protection Bureau chose not to comment after Tuesday’s meeting, but Department of Education official Denise Horn told NPR, “What these Corinthian students have experienced is troubling.”
In a statement given to the LA Times, Corinthian Colleges' spokesperson Kent Jenkins said that the company will "vigorously defend its policies, practices and track record of serving students effectively."
On Feb. 19, the original Corinthian 15 outlined the rationale behind their action in a letter addressed to the Department of Education:
Latonya Suggs told NPR that she is one of the students that Corinthian Colleges left out to dry. After borrowing thousands of dollars for a criminal justice degree from one of Corinthian Colleges, she says she found that employers would not accept her credentials. "I am completely lost and in debt," she told NPR.
Now Suggs is joining other struggling students in calling on the Department of Education to take more substantive action. The for-profit college industry has faced withering criticism from politicians, regulators and the public alike in recent years for its practices and its oft-questioned attention to student success. Although for-profit colleges only enroll 13 percent of the nation’s higher education students, they account for nearly half of its defaulted loans.
Many for-profit students fail to graduate altogether, and are left saddled with thousands of dollars of debt and no means of paying it off. Others do earn their cap and gown, only to find that employers do not recognize their degree credentials and are forced to take on low-wage work instead.
But Corinthian Colleges, Inc. is, according to Debt Collective, one of the worst offenders in an industry that is riddled with dubious educational propositions. After claims that the company had relied on predatory marketing practices, Corinthian Colleges agreed to close more than half of its campuses under a deal worked out last year with the Department of Education — a settlement that left many students high and dry without degrees but with loan debts. The Consumer Finance Protection Bureau even filed its own suit, alleging that the company had cooked its placement numbers and failed to be straightforward with potential students about their chances of career advancement.
Corinthian spokesperson Joe Hixson contested the claims that the company had shortchanged its students.
"Recent criticisms of Corinthian Colleges wrongly disparage the quality of the education our schools provide (and provided) as well as the career services assistance that we offer our graduates,” Hixson told Market Watch. He added:
But the Corinthian 100 activists certainly have political allies. Sen. Elizabeth Warren (D-Mass.) denigrated corporations for preying on low-income students. As Warren told Thomas Frank from Salon in an October interview:
In turn, the Massachusetts attorney general has called upon the Department of Education to forgive the remaining loan debt for Corinthian Colleges’ students.
Last month, the CFPB did work out a deal to void some student debt resulting from Corinthian College’s shuttering by forgiving $480 million in “high cost” loans that students had taken out from the college directly.
But 90 percent of student loans are public rather than private, and thus accountable to the federal government. Owing to tight bankruptcy standards, the vast majority of struggling students and recent graduates cannot look to claim bankruptcy to avoid penalties.
The Corinthian 100’s strike comes as attention to the student debt crisis is growing. A CFPB estimate put the total student debt in 2013 at more than $1.2 trillion in the United States. The class of 2014 graduated with an average debt of $33,000 per person.
These ugly figures have motivated the Obama administration to do what it can to mitigate the tough uphill climb that many indebted students face. On March 10, the president announced at Georgia Tech that he had signed a “Student Aid Bill of Rights” — an initiative that directs the Department of Education and the Consumer Finance Protection Bureau to safeguard students’ interests and provide greater oversight of higher education institutions.
“We’re trying to make sure that across the board, more and more young people can afford to go to college, and then afterward, aren’t so burdened with debt that you can’t do anything else,” Obama told students at Georgia Tech.
On Tuesday, the Department of Education released a public shaming list of 556 colleges and universities that required additional financial oversight because they didn’t have their administrative or financial house in order. For-profit colleges made up just under 300 of the places, but some private colleges and public universities also were called out.
As the Corinthian 100 students noted in their letter, the student debt crisis is not merely the result of unscrupulous for-profit colleges; the wider higher education apparatus is to blame.
Between skyrocketing tuition rates and stagnating wages, a college degree no longer offers a ready-made path to financial stability and the middle class.
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