Former students of the corrupt for-profit education brand Corinthian Colleges have a potent new list of allies in their fight to convince the Obama administration to forgive student loan debts incurred to pay for the company’s scams: 35 of the 46 senators who caucus with the Democratic party.
“When colleges break the rules, student loan borrowers should not be left to dig themselves out from under a mountain of debt they cannot repay. We are writing to urge you to provide fair and equitable debt relief to the victims of these violations,” the senators wrote in a letter directly to President Obama. The signees include prominent progressives like Sen. Elizabeth Warren (D-MA), powerful leadership figures like ranking Health, Education, Labor & Pensions Committee member Patty Murray (D-WA) and Minority Leader Harry Reid (D-NV), and members like Sens. Bill Nelson (D-FL) and Gary Peters (D-MI) who are viewed as relatively conservative compared to their caucus.
It isn’t the first time that elected Democrats have felt the need to put a shot across the administration’s bow on Corinthian’s victims’ plight. Warren and other progressives in the Senate, as well as a number of state-level officials from the Democratic party, have been vocally critical of the Department of Education’s (ED) handling of the fallout from Corinthian’s 2014 collapse. Critics from both inside and outside the government have long argued that the department is being too narrow in its efforts to define the group of people who can have their loans forgiven because Corinthian lied to them about their odds of landing a job after graduating from one or another of the company’s campuses.
But Wednesday’s letter is a louder and more forceful expression of those concerns. And it arrives at a crucial moment in the process of unwinding the Corinthian scam.
Climax Of Long-Running Fight
Initially, ED seemed to be stonewalling calls for debt relief from Corinthian’s students. Several of them mounted a debt strike, refusing to make payments to the government on their loans and citing an obscure and little-used provision of student lending laws called “borrower’s defense to repayment.” The law says student borrowers may petition to have their loans canceled if they believe they were defrauded by the school that received the taxpayer-backed payments. But there is no real process in place for making a borrower’s defense claim; debt strikers had to make up their own application forms because ED had never generated any.
The debt strike succeeded in pulling ED into negotiations over how borrower’s defense claims will work going forward. The final scheduled meeting in those negotiations is next week. Borrowers and their advocates are very concerned that the administration is pushing for a version of the rules that would make it much harder for students to get relief even when the evidence is in their favor.
The 35 senators who wrote to Obama explicitly raised the same concerns, as did Reps. Maxine Waters (D-CA) and Bobby Scott (D-VA) in a separate letter of their own.
“Unfortunately, we are concerned that the Department’s current proposal does not seem to ensure the process is fair for students,” they wrote. “These borrowers should not have to hire attorneys or go through a process where they would each have to apply for relief and prove evidence of misconduct and individual harm, particularly in instances where federal or state agencies already have evidence of unlawful activity. Such a process would be incredibly burdensome for the very students who need the most help and would stack the deck in favor of schools that can afford an army of lawyers.”
The letter goes on to echo numerous other student criticisms of the ED proposal, including a tight statute of limitations on borrower’s defense claims and a persnicketty definition of what constitutes sufficient evidence of fraud to justify voiding someone’s loan debts.
Government’s Cozy Handling Of Corinthian
The Corinthian saga has been convoluted for years. Yet it has received relatively little scrutiny in the press, considering that hundreds of billions of dollars and years of people’s lives are at stake. The school’s employees demonstrated a pattern of misleading students and saying whatever was necessary to keep people enrolled, borrowing, and paying.
Yet the administration seemed determined to force repayment from such victims, even going so far as to rescue Corinthian from financial collapse at one point months before the company finally went under.
After the bankruptcy, ED shepherded the sale of many Corinthian campuses to another for-profit education company, ensuring the schools would stay open. That prevented numerous students from seeking a more straightforward version of debt relief. Where Corinthian campuses couldn’t be sold and had to close down, administration officials looked on as other, similar companies swooped in to hold recruiting fairs for stunned, confused students.
Next week’s final negotiating meeting on the borrower’s defense rules will not be the end of the story. But by timing their pressure campaign just ahead of that session, the Senate Democrats may have significantly improved the students’ chances of defining borrowers’ rights as broadly as possible.
This article initially misidentified Sen. Patty Murray as the top Democrat on the Budget Committee. She left the Budget Committee to serve as ranking HELP Committee member in 2015, where she still serves.