How the Department of Education Could Fix For-Profit Colleges
When Corinthian Colleges, a national chain of for-profit colleges, went bankrupt last spring, students and taxpayers were left holding the bag. Though a federal judge recently found Corinthian liable for $531 million in damages for its illegal marketing and lending practices, the Department of Education failed to take effective action against the chain as it collapsed — indeed, the Department provided Corinthian with $35 million in new student aid money as it circled the drain.
That $35 million is gone forever, and the chances of anyone recouping the $531 million in damages are essentially zero. But even that figure is just the tip of the iceberg — the federal government backed some $3.2 billion dollars in student loans to Corinthian in just its final four years, much of which federal law entitles students to have forgiven in the wake of the chain’s closing. By one estimate, the government could wind up providing Corinthian’s alumni…
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