Sunday, December 11, 2016

Pam Hunt, debt striker, begs Obama to forgive all student loan debt of former Corinthian Colleges students: Let's hope the President responds

When Barack Obama steps down from the presidency next month, he will leave a huge mess behind for the next president to clean up. 43 million Americans hold student loans, and almost half of them can't pay them back.

Most desperate among the victims are the hapless souls who attended for-profit colleges. Many were enticed to enroll by high-pressure and even fraudulent recruiting tactics. Most paid far too much for their educational experiences, and few obtained jobs that paid well enough to justify their educational investments.

Under pressure from state and federal regulators, some for-profit colleges are closing and filing for bankruptcy. Corinthian Colleges, with 350,000 former students, filed for bankruptcy last year. ITT Tech filed for bankruptcy a few months ago, and Dade Medical College filed a bankruptcy-type action in Florida after it closed under allegations of corruption. Global University lost all federal funding earlier this month and will likely close.

Unfortunately, most of the students who attended these ne'er-do-well colleges are still liable on their student loans.  The federal government has processes in place for students to obtain loan forgiveness if they can show they were enticed to take out loans through fraud. But the process is slow. In late September, Senator Elizabeth Warren wrote the Department of Education a letter, specifically complaining about the Department's failure to provide speedy relief for Corinthian students.

Earlier this week, Pam Hunt, a former Corinthian Student, appealed directly to President Obama to forgive the student-loan debt of all Corinthian students. "We're appealing to you this one last time," Hunt said. "Please forgive these debts before you leave office."

President Obama should head Hunt's plea, but he probably won't. Secretary of Education John King raised two objections to Hunt's proposal. First, King said, it is not clear that fraud occurred on every Corinthian campus. Second, he said that Corinthian students should testify individually that they were victims of fraud.

King is ignoring the fact that the for-profit college industry is riddled with corruption and fraud, and has victimized millions. DOE doesn't have the resources to deal with these victims on a case-by-case basis, and many for-profit students aren't sophisticated enough to file administrative actions anyway. After all, more than half of the people in income-driven repayment plans are not certifying their income on an annual basis, which is a requirement for remaining in these plans.  Few Corinthian students have applied for loan forgiveness under DOE guidelines, even though almost all are probably entitled to relief.

Hunt is right. DOE should forgive all student loans taken out by Corinthian students. And it should forgive all student debt taken out by ITT Tech students, Global University students, and students who attended Dade Medical College.

After all,whether DOE forgives these loans or not, most of these loans won't be paid back. It is in the national interest to give all victims of the for-profit college industry a fresh start.

Pam Hunt: "Please forgive these debts before you leave office."

References

Andrew Kreighbaum. New Call for Debt Relief Before Obama Leaves. Inside Higher Ed, December 6, 2016.

Tamar Lewin, "Government to Forgive Student Loans at Corinthian Colleges," New York Times, June 8, 2015.

US. Government Accounting Office. Federal Student Loans: Education Needs to Improve Its Income-Driven Repayment Plan Budget Estimates. Washington, DC: U.S. Government Accounting Office, November, 2016.

Michael Vasquez. Dade Medical College sets in motion plan to sell assets. Miami Herald, November 18, 205.

 

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