For-profit college loan forgiveness

[Wisconsin Beth]

www.slate.com/blogs/moneybox/2015/06/09/corinthian_college_debt_forgiveness_we_created_this_monster_now_we_re_paying.html

U.S. taxpayers are about to pay a lot of money to atone for Corinthian College’s sins. Monday, the Department of Education announced that it would forgive debts belonging to thousands of former students who attended the for-profit education chain, which tumbled into bankruptcy last month after a long and predatory run.

This is a win for decency. It is also symbolic of Washington’s abject failure to regulate the world of higher education during the past decade.

Corinthian was as large as it was vile. At the height of its money-sucking powers, the company enrolled more than 110,000 students and operated almost 120 campuses in the U.S. and Canada, which ran under the names WyoTech, Everest, and Heald. Like most of the for-profit colleges that swelled in size during the late 2000s, it subsided largely on a diet of federal grants and student loans, borrowed by naive, low-income undergrads who it convinced to pay tens of thousands of dollars by dangling the promise of a decent paying career.


NOt sure if this belongs here or where so mods, feel free to move as needed.

[haapai]

I also wanted to start a thread regarding that article but couldn't find a hook. 

I agree wholeheartedly that we created these monsters, fed them on federally-backed student loans, and ignored some outrageously fraudulent behavior for years.  We failed to regulate or police even the worst of the worst because slightly better schools (U of P and fourth and fifth-tier state public schools) lobbied hard against any oversight that might effect them.

But what I'm really interested in is debt relief for Corinthian borrowers.  I think that there are logical arguments for blanket relief without a whole lot of paperwork.  It's really a matter of the cost of collection exceeding what can be collected.  I'm the taxpayer who ultimately pays up and I believe that writing off these debts is in my best financial interest. 

[billisonboard]

Just think, we would be hearing a lot more about this type of thing if those who wish to privatize public education using your tax dollars to pay for vouchers got their way. 

[Shooby]

That's fine. There is an endless supply of tax money for bailouts.

[haapai]

Jun 10, 2015 8:03:46 GMT -5 billisonboard said:

Just think, we would be hearing a lot more about this type of thing if those who wish to privatize public education using your tax dollars to pay for vouchers got their way. 

There are already plenty of stories of miseducation, misconduct, and misappropriated funds coming out of charter schools.  More vouchers will probably mean more such stories.  We'll smell the stink but there won't be the question of how to handle the overwhelmingly uncollectable accounts. 

[haapai]

Jun 10, 2015 8:08:03 GMT -5 Shooby said:

That's fine. There is an endless supply of tax money for bailouts.

I see it as a blood from a turnip situation.  Despite the unusually powerful collection tools that the DOE has for collecting the debt, the Corinthian debtors are unusually turnip-like.  Identifying the small number of collectable accounts and small number of partially collectable accounts could easily cost more than what is collected. 

There's also an argument that without clear-cut relief, many of these borrowers will drop out of the above-ground economy, pay very little in taxes, but still require quite a bit of public expenditure.  Keeping the debts on the books might make the DOE look slightly more competent but it will cost us in other forms of tax revenue. 

[AgeOfEnlightenmentSCP]

Was this institution approved to receive tuition in the form of federal taxpayer backed student loans?  I know you're desperate to blame the government-created student loan bubble on this one, single, accredited "private" school. However, like the mortgage debacle, the student loan debacle is 100% a government-created man-made disaster.

[happyhoix]

Jun 10, 2015 9:04:09 GMT -5 AgeOfEnlightenmentSCP said:

Was this institution approved to receive tuition in the form of federal taxpayer backed student loans?  I know you're desperate to blame the government-created student loan bubble on this one, single, accredited "private" school. However, like the mortgage debacle, the student loan debacle is 100% a government-created man-made disaster.

Yes, damn the government for making low interest loans available for poor students so they could attend college -damn them all to hell.

[happyhoix]

I agree wholeheartedly that we created these monsters, fed them on federally-backed student loans, and ignored some outrageously fraudulent behavior for years. We failed to regulate or police even the worst of the worst because slightly better schools (U of P and fourth and fifth-tier state public schools) lobbied hard against any oversight that might effect them.

I agree, we should have had better oversight of these sharks but there were big lobbying groups pushing back against it.

A friend of mine, in her forties, wanted to get back into the job market but had been a SAHM for years, so she was struggling. She saw an ad promising jobs if you called a phone number, she called it and got a very heavy handed pitch from a salesperson trying to rope her into one of these schools. The sales person kept insisting she would never find a job if she didn't fork over $35,000 for a two year degree in 'technology' or some such.

Fortunately my friend didn't bite.

If a school has to hire aggressive phone sales people to lure in students, it's a shitty school.

[Deleted]

Students have been complaining about that school's predatory behavior for years. Why does it take the school going into bankruptcy BEFORE the government will do anything?

I'm so sick of how giant and lame our government has gotten. Too many incompetent people running everything. No watchdogging. Billions of dollars running through peoples fingers that they just don't care about because it isn't their money. 

[haapai]

I've been following the story * a bit and it can be argued that the actions of the states forced the feds to cut off the loans, which caused the bankruptcy.  When the schools were about to close, the feds did a couple of things that weren't particularly in the interests of the students who were currently enrolled. 

* the story is a mess.  Corinthian operated a ton of schools under several umbrellas and there's a ton of conflicting, undated, and conflated information out there.  It's hard to read much on the story without sensing that journalism as we know it is crumbling.  It's seems to be being covered by bloggers. 

ETA:  Salon has a series on it that isn't paywall protected.  If you enter Corinthian Colleges in the search box, lots comes up but it isn't the most rigorous journalism.  If you're gonna go that route, I'd definitely recommend reading the oldest articles first. 

[The Captain]

Jun 10, 2015 9:04:09 GMT -5 AgeOfEnlightenmentSCP said:

Was this institution approved to receive tuition in the form of federal taxpayer backed student loans?  I know you're desperate to blame the government-created student loan bubble on this one, single, accredited "private" school. However, like the mortgage debacle, the student loan debacle is 100% a government-created man-made disaster.

Any school which is accredited by a recognized agency is eligible for Federally backed SL's.  Some of these agencies accredit a wide variety of schools (including beauty schools, massage therapy, culinary schools etc) which is why you've seen an explosion in non traditional programs and the fees have gone through the roof because federal loans are now available.

In IL beauty schools were required to become accredited in order to maintain a mimimum standard for health code reasons.  When this happened those schools were added to the Title IV list and suddenly became a lot more expensive to attend.  Same for culinary schools.

Now the question is, do these types of students deserve/warrant federal student loans?  I don't know.  All I know is before the change my aunt got a beautician's license for less about $1500 in tuition and when her daughter went 10 years later the program was over $12K.  My cousin went about 12 years ago so I don't know what the costs are now.

www2.ed.gov/admins/finaid/accred/accreditation_pg9.html#TitleIVRecognition

So yea, while I benefited from Federally backed SL's, I do believe they are a direct contributor to the skyrocketing costs of education.

[happyhoix]

Jun 10, 2015 10:06:27 GMT -5 @rockit said:

Students have been complaining about that school's predatory behavior for years. Why does it take the school going into bankruptcy BEFORE the government will do anything?

I'm so sick of how giant and lame our government has gotten. Too many incompetent people running everything. No watchdogging. Billions of dollars running through peoples fingers that they just don't care about because it isn't their money. 

Because there was a lobby group for the for-profit programs that was greasing the wheels and coming up with all kinds of reasons that the fed shouldn't take a closer look at the whole student loan program.

If we outlawed lobbying firms and big PACs we would go a long way towards getting the elected officials to focus on the issues and not on which lobby group can provide the sweetest perks or who can fork over the most campaign money.

[djAdvocate]

Jun 10, 2015 8:08:03 GMT -5 Shooby said:

That's fine. There is an endless supply of tax money for bailouts.

only for corporations.  when it comes to the very real lives of their victims, the funds magically disappear.

[Shooby]

Who bailed out corporations?

[djAdvocate]

Jun 10, 2015 16:26:00 GMT -5 Shooby said:

Who bailed out corporations?

we did.  over, and over, and over, and over, and over again.

[Shooby]

Why?

[AgeOfEnlightenmentSCP]

Jun 10, 2015 17:24:07 GMT -5 Shooby said:

Why?

Because...

[djAdvocate]

Jun 10, 2015 17:24:07 GMT -5 Shooby said:

Why?

because that is who's boss.  why else?

[EVT1]

A bailout is not enough for some people:

www.washingtonpost.com/business/we-bailed-you-out-and-now-you-want-what/2015/06/05/95ba1be0-0a27-11e5-95fd-d580f1c5d44e_story.html

     Americans were angry when Wall Street’s greedy and risky behavior triggered a global financial crisis in 2008. They were angrier still when the government had to borrow and spend hundreds of billions of dollars to rescue mortgage giants Fannie Mae and Freddie Mac, the largest banks and the insurance company AIG. They were outraged when they found out that executives at those enterprises were continuing to receive big salaries and bonuses.

     So just imagine how outrageous it would be if some Wall Street sharpies went to court to argue that they didn’t benefit enough from the bailouts and that taxpayers should pay them tens of billions of dollars more.

     In fact, they did. And, according to legal observers, they just might prevail.

Sometimes dead is better.

[Ombud]

Jun 10, 2015 9:57:13 GMT -5 happyhoix said:

Jun 10, 2015 9:04:09 GMT -5 AgeOfEnlightenmentSCP said:

Was this institution approved to receive tuition in the form of federal taxpayer backed student loans?  I know you're desperate to blame the government-created student loan bubble on this one, single, accredited "private" school. However, like the mortgage debacle, the student loan debacle is 100% a government-created man-made disaster.

Yes, damn the government for making low interest loans available for poor students so they could attend college -damn them all to hell.

What about damn the predatory "education facilities" that aren't properly certified??

[EVT1]

I think the key point to remember about student loans is that they are the only loans you cannot discharge in bankruptcy- hence the huge market for private lenders to abuse the shit out of their borrowers with the blessing of the government.

This is the one time I agree with PBP- where a good idea- helping poor kids to attain  higher education-  actually caused tuition to rise, the creation of bullshit 'colleges' and the marketing of debt to our children. 

Obama took out the private lenders and their usury- about damn time the government does not cover loans by these predators.