Duped by For-Profit Schools, Students Gain Big Allies in Push for Loan Forgiveness

Massachusetts Attorney General Maura Healey joined the call to forgive student debt. (Photo: suffolk.edu)

Duped by For-Profit Schools, Students Gain Big Allies in Push for Loan Forgiveness

Answering Sen. Elizabeth Warren's call, Massachusetts AG slams for-profit colleges as 'free to break the law.'

Massachusetts Attorney General Maura Healey has asked the U.S. Department of Education to forgive the debt of hundreds of students who were forced into loans and thousands of dollars in tuition payments by the failing for-profit Corinthian Colleges.

"Schools should not obtain public monies based on actions in violation of state law, and students should not be required to pay for such violations," Healey wrote in a recent letter to the Department of Education. "Based on our investigative findings, we believe the federal loans of Corinthian students in Massachusetts should be canceled."

Healey joins the growing call, spearheaded by Sen. Elizabeth Warren (D-Mass.), to forgive Corinthian student loan debts. Warren has previosly slammed the for-profit college company as predatory and criticized the government for subsidizing an industry that is "ripping off young people... who are the first in their family to graduate from college."

In December, Warren and 12 other senators also wrote a letter (pdf) to the Department of Education, demanding that officials create a way for students to relieve their financial burdens when taken advantage of by schools like Corinthian.

"Without such a process, duplicitous colleges are free to break the law, to suck down billions in federal student loan dollars, to treat students unfairly -- and to stick borrowers with the bill,"the letter from the senators stated. "This is exactly what we have seen at Corinthian Colleges. If the department fails to act, we will undoubtedly see it again."

Corinthian, which operates Everest Institute, Heald College, and Wyotech, was the biggest for-profit college system in the U.S. until 2014, when it was slapped with a cluster of lawsuits over its lending schemes and collection tactics. One suit, filed by the Consumer Financial Protection Bureau, charged that Corinthian preyed on low-income students by falsely advertising an education with their schools as an avenue to a stable career path. Instead, the school appeared more interested in ensnaring them into exorbitant loans to pay for high-price tuition that held little or no career payoff.

Now facing bankruptcy, the company will not likely be able to repay its more than 70,000 students, over 60 percent of whom defaulted on the private loans offered by the schools. As Corinthian began shuttering campuses around the country in response to the lawsuits, countless students were left saddled with debt--and no degree to show for it.

Yet the government released financial aid to the company to help keep it afloat, while offering no such help to the students, National Consumer Law Center attorney Robyn Smith told the Boston Globe on Tuesday.

"There's widespread evidence they've engaged in years and years of deceiving students and taxpayers," Smith said. "We're not seeing any relief for the students who've suffered the consequences."

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