Help for Corinthian Victims in California Governor's Hands

09/25/2015 01:23 am ET | Updated Oct 08, 2015
  • Robert Shireman Senior Fellow at The Century Foundation; former education official in the Obama and Clinton Administrations

[Update: On October 8, 2015, Governor Brown vetoed the legislation that would have provided support for nonprofit legal assistance to Corinthian victims.]

When now-Governor Jerry Brown was serving as California's attorney general in 2007, he reached a legal settlement with Corinthian Colleges, a chain of for-profit colleges that his office had accused of false advertising and unfair business practices. Brown said at the time that because of the company's misrepresentations, students who had been promised glowing job opportunities instead "ended up unemployed and deep in debt."

Rather than being tamed by the $6.5 million fine, Corinthian seemed to treat it as simply a cost of doing business, a launching pad for a new, bigger round of irresponsible behavior. Over the next three years the company's Heald, Wyotech, and Everest brands grew by 68 percent, adding the equivalent of UCLA's total enrollment to reach 113,818 students in 2010. In 2009, the company spent nearly $300 million on marketing and recruiting, 45 times the amount it had been fined. Most of that money came from taxpayers in the form of federal and state grants and loans.

By 2014, when Corinthian Colleges began to collapse, it was the subject of numerous investigations and lawsuits over misleading recruiting and falsified job placement records (this Buzzfeed report captures the real human toll). Finally, in April of this year, just before the company declared bankruptcy, the federal government found that Corinthian had been "misrepresenting its placement rates to current and prospective students and to its accreditors."

The company's actions were exactly the opposite of the honest advertising the company's executives had pledged in the agreement with then-Attorney General Brown.

A vast swindle like this one leaves a lot of human wreckage, and much of that wreckage is in low-income communities in California. The good news is that both the federal and state governments are offering some debt relief and tuition refunds. But the options and the process are unavoidably confusing. As this notice from California's current attorney general indicates, victims are encouraged to get a lawyer to help them. And if they begin by doing a Google search for assistance they are likely to be ripped off yet again, as my colleague at The Century Foundation points out in his piece about scam artists preying on student debt holders.

Legal aid organizations are overwhelmed by the demand for assistance. Legal Services of Northern California reports turning away up to half of those seeking help. The Veterans Legal Clinic at the University of San Diego is unable to address veterans' other problems while focusing on the needs of former Corinthian students.

Governor Brown could bring some additional help to Corinthian victims if, by October 11, he signs a bill currently on his desk. The legislation, authored by Assemblymember Jose Medina (D-Riverside), would provide a small amount of support for nonprofit legal assistance, and it would also restore students' eligibility for state grant programs so that the students can start fresh.

In hindsight, a tougher stand in 2007 might have prevented the harm that was done to students and the waste of taxpayer dollars by Corinthian and other for-profit colleges. But at least Governor Brown, with this bill, has the opportunity to repair some of the damage.