An organized revolt against the U.S. Department of Education is growing.
On Monday, the so-called “Corinthian 15” announced they had grown to the “Corinthian 100,” as former students of allegedly dodgy for-profit schools once owned by Corinthian Colleges, Inc. refuse to repay federal student loans in protest against Education Department policies.
And on Tuesday, they’re scheduled to meet with officials from the Education Department and Consumer Financial Protection Bureau to plead their case.
The borrowers, who collectively owe the department and their private lenders some $3.3 million, launched their “debt strike” in February to force the Education Department to forgive federal student loans taken out by tens of thousands of Americans to attend Corinthian’s schools. The strike was prompted by the department’s handling of Corinthian, a crumbling operator of for-profit schools such as Everest, Heald and Wyotech.
Last year, the troubled company was forced to sell more than 50 campuses and shutter others under a deal brokered by the Education Department that followed lawsuits by numerous state and federal authorities alleging the company had defrauded students for years with fake job prospects and false graduation rates.
While the new owners of the campuses got the schools at a discount and Corinthian shed huge amounts of liability, former students who claim they were swindled into taking out federal loans to attend classes are stuck with their debts.
“The [Education] Department has chosen to bail out the company while sinking students in a lifetime of debt for degrees that many experts have called worthless,” the debt strikers alleged.
Borrower advocates active in the Occupy Wall Street movement helped organize former Corinthian students to challenge the Education Department over its lackluster supervision of the chain of for-profit colleges. Corinthian has disputed allegations that it misled students or published false job placement and graduation rates.
Now, the roughly 100 former Corinthian students want Education Secretary Arne Duncan to address his legacy of allowing the company to lure students into taking out loans backed by taxpayers under allegedly false pretenses by forgiving those debts on the grounds that they were fraudulently originated. In effect, the debt strikers want the department to acknowledge its own failures to properly oversee Corinthian’s schools.
The Education Department has disbursed $4 billion of public money in the form of loans to students at Corinthian’s campuses since the start of the 2010-2011 academic year, department data show. Nearly all of that has likely gone straight to the company.
The department will have to contend with borrowers’ claims that are backed by evidence amassed by the federal consumer bureau and by state attorneys general from California to Massachusetts.
“They are demanding not only that the federal regulator of the nation’s colleges and universities do its job and cancel the debt of all Corinthian students, but also laying the groundwork for future claims against predatory lenders,” said Luke Herrine, one of the group’s organizers.
Last month, Rep. Maxine Waters (D-Calif.), the top Democrat on the House Financial Services Committee, said she supported the debt strikers.
The Education Department has “complete discretion” to cancel federal student loans in instances where borrowers demonstrate that schools defrauded them, according to the Department of Justice.
On Tuesday, leaders of the “Corinthian 100” movement will give the Education Department applications from more than 300 borrowers demanding that the department cancel their federal debts.
“Not only does the law tell them to erase our debts, it’s the right thing to do,” Ann Bowers, one of the borrowers refusing to repay her federal student loans, said of the Education Department. “If they really thought their job was protecting students they would have done it already.”
CORRECTION: Due to incorrect information from one of the debt strike's organizers, a previous version of this story reported that organizers will give the Education Department applications from more than 400 borrowers demanding the department cancel their federal debts. It is 300.
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