Some Corinthian Students Feel ‘Betrayed’ By Debt-Forgiveness Offer

In a step forward for the student debt movement, the Obama administration late Monday announced a process for “debt relief” for students who attended the now-defunct Corinthian Colleges. The announcement marks an end to a four-year investigation that has already resulted in $480 million in loan forgiveness for Corinthian graduates.

But this potential victory comes with a huge, gaping caveat: in order to get it, most students must jump through many bureaucratic hoops that include onerous documentation and a high burden of proof for receiving relief. The Debt Collective, a student organization formed to fight onerous debt burdens, characterized this process as “bureaucratically tortured” and “re-victimizing” students, “designed to provide relief only to those who hear about it and can figure out how to navigate unnecessary red tape.” (The relief process is spelled out here.)

“People are really upset. I think they feel let down and betrayed by the DoE,” said Debt Collective member Alexis Goldstein.

In past cases, only 6 percent of students whose colleges closed asked for their debt to be discharged. Goldstein said it is “very much our fear” that this rate will remain low for Corinthian grads. She attributes the low rate to bad advice from the DoE, such as encouraging students to transfer credits to another university, which invalidates students from receiving debt relief.

“We think…that [the government’s debt relief decision] is important,” said Maxwell Love, president of the United States Student Association, in an email statement. “But we also think the importance is in the details. We need to make sure this relief actually trickles down to students and their families, otherwise it is nothing more than an opportunity for good publicity for the Department.”

Corinthian Colleges was one of the largest chains of for-profit colleges, with over 100 campuses across the nation. After nearly collapsing last year, Corinthian finally filed for bankruptcy in the midst of fraud and corruption charges. Since 2004 there have been numerous lawsuits against Corinthian’s fraudulent practices. These include lying about job placement rates, improper training, and charging exorbitant rates.

The Corinthian debt forgiveness battle started with the “Corinthian 15”–former students who banded together this past February and refused to pay their debt. Their numbers soon swelled, and they rebranded themselves as the “Corinthian 100” debt-strikers.

The decision potentially affects 350,000 students, totaling around $3.6 billion of debt relief. But much of that will likely remain unredeemed unless the education secretary signs an Order of Discharge that would automatically release students of their debt obligations.

This half-victory is part of a larger battle: eliminating student debt in America. We are in a massive student debt crisis. 40 million Americans currently hold student debt. The graduating Class of 2015 set a record, with the average student now graduating with a debt of $35,000. The total student loan debt has now reached a crushing $1.3 trillion. If nothing is done, White House projections predict student debt to balloon to over $3 trillion in less than a decade.

CAF will join with a dozen other organizations Wednesday on Capitol Hill to present 400,000 petitions for debt-free college. (You can sign here). Debt-free college is a smart investment in America’s future that’s quickly gaining support–including from major presidential candidates.

The Corinthian Colleges decision is a step in the right direction. We’re still fighting for a leap.

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