Advertisement

‘A Pool Of Sharks’: Why For-Profit Colleges Are Descending On Shuttering Corinthian Campuses

Tables set up by for-profit colleges eager to snap up students from Corinthian College’s now-closed Ontario, CA campus CREDIT: THE DEBT COLLECTIVE
Tables set up by for-profit colleges eager to snap up students from Corinthian College’s now-closed Ontario, CA campus CREDIT: THE DEBT COLLECTIVE

When Corinthian Colleges, Inc. quit trying to find a buyer for its remaining campuses in California on Sunday, it launched one of the largest student crises in the history of the Department of Education (ED).

The department is required to discharge all student loan debts for Corinthian customers who were enrolled in a now-closed campus at any point in the 120 days prior to the closure. That “closed-school discharge” policy has only been used rarely in the past, and never at the scale that will be required of it now in California. Almost 16,000 Corinthian students in the state can now have their loans canceled, which an ED official estimated would cost taxpayers $214 million.

Those students can also choose to transfer to a new school and keep their loans.

Because transferring locks the student into repaying their full debt burden, it’s a risky choice. Students who opt to transfer are gambling that finishing their degree somewhere else, with much of their coursework linked to the most notoriously abusive and low-value educational institution in America, will allow them to find work that pays well enough to cover decades of loan payments.

Advertisement

Students who are willing to renounce the time they’ve already sunk into their school will walk away from a lifetime of debt payments. But that doesn’t make it an easy choice for people like Tiffany Contreras who have spent years trying to climb the economic ladder through a for-profit degree.

“For two years, I drove over an hour each way. I missed my son’s first day of kindergarten. I’ve missed out on job opportunities because I was trying to get myself through school,” Contreras told ThinkProgress. The 25-year-old was just 9 weeks away from finishing a paralegal degree at the Ontario, CA campus of Everest College. She had been offered a job in a Minnesota law firm starting in July, the same month her lease would be up in Victorville, and planned to move her family out with her.

All of that is gone now, replaced by an excruciating decision. “Do I keep the debt and try to get a half-assed degree? Or do I start all over and pretend that the last two years of my life didn’t count for nothing?”

Contreras, who has worked a few hours a week decorating pies at a Marie Callendar throughout her time at Everest, said she fears her future will now revolve around deep fryers and cash registers instead of court filings and Latin phrases. “I’m at a complete loss of where to go from here, except maybe get another fast food job,” she said. “That’s probably my career now: working fast food for the rest of my life.”

That’s probably my career now: working fast food for the rest of my life

It’s the ED’s job to help Contreras and thousands of others understand their options. As it does so, however, students say it’s tilting the landscape in some important ways that could keep Corinthian’s victims boxed into their loan debts forever.

Advertisement

Those on-campus counselling sessions began this week, and multiple attendees told ThinkProgress that department officials are are encouraging students to transfer rather than presenting their options neutrally. Shellshocked students arrive on campus to find their school is closing, then walk into a room where staff explain that they can apply for a loan discharge or attempt to transfer their Corinthian credits to a new institution.

When they leave that room, they’re beset by recruiters from other for-profit colleges, offering free swag and urging students to sign a transfer application on the spot.

“They directed me down the hallway and said if you want to transfer there’s schools over here,” Contreras said. “But it’s kind of like being in a pool of sharks.”

Students who have graduated already were also on campus Wednesday, and saw similarly slanted advice being given out. Francis Hutchinson, who owes $33,000 for the paralegal degree she finished at the beginning of April, told ThinkProgress that ED officials were steering students away from discharge and toward transfer. She described witnessing “a representative from [the ED] who was telling students that they don’t want to get loan forgiveness, they want to transfer their credits, because they already spent the last few years or months on their education. If you get loans forgiven you won’t be allowed to keep your credits, and if you decide you’re not able to pay your loans, they’re going to garnish your wages, and put liens on everything you own, and garnish your social security checks.”

Hutchinson asked a California state official who was on campus Wednesday what she’s supposed to do with a diploma from a disgraced school that fudged key statistics about its students.

“What if a lawyer laughs in my face? She said, ‘if people don’t hire you maybe you’re just in the wrong line of work.’”

Advertisement

Government officials have no control over who is invited to the fairs, spokeswoman Denise Horn told ThinkProgress, and “do not have jurisdiction over what other recruiters do at the fairs.” At least one of the colleges Corinthian invited to Ontario, Argosy University, is on the Department of Education’s own watchlist for extra monitoring of its finances.

The large number of for-profit schools on federal probation suggests that the next Corinthian might not be far off. On Thursday in Washington D.C., progressive Rep. Mark Takano (D-CA) introduced legislation he hopes would make it harder for anyone to find themselves in this situation again. The PRO Students Act “is aimed at trying to prevent future Corinthians,” he told ThinkProgress, by “giving students tools to ferret out which institutions of higher ed are effective or not effective.” The bill would also prohibit for-profit schools from spending federal money on recruiting and marketing. “Taxpayers would be outraged at 23 percent of the revenue going toward recruiting, and exceeding what for-profits actually spend on instructing students which is just 17 percent,” he said.

There was another group on the Ontario grounds Wednesday, telling people like Contreras not to rush into a transfer or settle for the two-track choice they were being presented inside. Activists and strikers with the Corinthian 100 — a group of Corinthian victims whose demand for full discharges of their debts has gotten the backing of Sen. Elizabeth Warren (D-MA) and other progressive lawmakers — were on hand to encourage students to take a more aggressive path that the ED is not prepared to discuss publicly.

“The Department of Education is out here lying to students,” debt striker Nathan Hornes II, who has $68,000 in loan debt for a business management degree from the Ontario campus, told ThinkProgress on Wednesday. Hornes and fellow striker Tasha Courtright said they were asked to leave the Everest building in Ontario by security, but allowed to talk to students outside. “They’re telling the students that haven’t graduated yet and are currently enrolled in the school, just go to another for-profit college. They should be telling them we’re going to discharge all your loans so you can make a decision about going to another college,” Hornes said.

There is a second, murkier route out of debt available to these students, through an administrative process called “defense to repayment.” The Corinthian 100 delivered hundreds of these “DTR” petitions to the Department of Education in Washington, D.C. in early April. Courtright said there’s a sharp contrast between how the government talked to them about DTR in a closed room, and how they’re talking to students in California this week.

“In D.C., they’re all about helping us and finding a way to get our loans discharged, they’re doing everything they can and working on getting a site up for DTR [applications],” she said. “But when we come here, they’re not allowed to talk about DTR and they’re not giving students that option.”

The strikers themselves acknowledged that the choice facing people like Contreras is not clear-cut.

How do you call somebody and tell them, I’m sorry, I’ve failed?

“You wanna tell people and assure them they’re doing the right thing, but in this situation there is no right thing,” Hornes said. “You spent so much time and you’re just weeks away, a couple months away from graduating. But the whole thing is, it’s better to start over with a school that has good intentions and that is a reputable school rather than to get a degree from a school that is no longer going to exist.”

The conduct Contreras and the strikers describe deviates from what department officials have said in the past about how they would conduct outreach and counselling for Corinthian students whose schools close. Prior to the department-arranged sale of Corinthian’s other campuses to a new company, Undersecretary Ted Mitchell told ThinkProgress that his staff would work to promote a better understanding of students’ discharge options should schools close.

“We would reach out to every student and make them aware of their options and make it as easy as possible,” Mitchell said at the time, noting that just 6 percent of eligible students have chosen closed-school loan discharges in the past. “Considering six percent is the natural flow, we would not just allow the natural flow.”

Mitchell also defended the Corinthian ownership transfer in part on the grounds that independent monitors will be in place to ensure the new owners do not corral students into choices that keep them in debt by shading their conversations with students to downplay the benefits of a discharge. “The monitor will be able to see if there’s a thumb on the scale. We hope that the monitor will be able to identify that and raise it to the attention of Zenith and to us,” Mitchell said in 2014.

In California now, it’s Mitchell’s own agency that’s putting a thumb on the scale. A department official told ThinkProgress that the government is encouraging students to transfer and emphasized the historic nature and complexity of what’s going on.

“We are doing everything possible within a very short time window to make information available to help students affected by the largest college shut-down in American history,” ED spokeswoman Horn said. “In addition to making students aware of their options, we have also been in touch with community colleges and worked hard so that they could attend this week’s fairs” alongside the for-profits invited by Corinthian.

Horn said that the behavior students described was outside the instructions the department gave to staffers it sent to California campuses. “Department officials are only allowed to tell students their options, so they can make an informed decision about what is best for their circumstances,” she said, emphasizing that every eligible student who applies for a discharge will get it. “They could not offer students advice on their situations, they could only discuss the options available. We will continue to train and follow up with FSA officers who are working with Corinthian students to ensure students get what they need to decide their course of action.”

But throughout Corinthian’s collapse, the department has believed that a discharge is generally going to be the worst option available to these students. The steering that students describe on Wednesday would be consistent with ED’s broader belief about what’s best for the sort of low-income, high-ambition students who bought what Corinthian was selling.

“Giving students an option to finish feels to us like the right thing to do,” Mitchell told ThinkProgress in December. For people like Contreras, “it’s cold comfort to know that you can apply for a loan discharge. Because the reality is, you’ve gotta start over.”

But Corinthian’s falsified job placement rates and low-quality classroom instruction for many programs has forever tainted the value of the education that such students bought. And even without the scandal, a for-profit college degree is worth less in job interviews than a community college degree that would have cost nearly four times less. The debts associated with the degrees are uniquely permanent: all but impossible to discharge in bankruptcy, grounds for garnishing your Social Security checks when you’re old, and transferrable to your kin if unpaid when you die.

The California closures mean that Mitchell’s theory about what students want will get a real-world test. For now, though, some students are too distraught to know quite what to do.

“I haven’t even told my own family, my parents. I don’t know how to break it to them,” Contreras said. “Your own parents are so proud of you, putting yourself through college, a single mom, going back and forth to school, working minimum wage, trying to make something of yourself. “

“How do you call somebody and tell them, I’m sorry, I’ve failed?”