Department of Education to weigh in on for-profit universities

For-profit universities have come under fire in recent years, particularly around the areas of misrepresentation of job prospects and the universities’ reliance on federal student loans. An unprecedented number of students have asked the government to dismiss their college student debt after a June announcement from the Department of Education about making the debt-relief process easier.

Find out how the Department of Education reacted to for-profit universities' bankruptcy. (Credit: JWJ.org)

Find out how the Department of Education reacted to for-profit universities’ bankruptcy. (Credit: JWJ.org)

The government made the offer after the closing of Corinthian College, a for-profit college system that filed for bankruptcy. For your next education research paper, consider discussing one of the following topics.

For-profit Corinthian College—symbol of a problem

The U.S. government has been going after for-profit universities for over a year now. With Corinthian College and its numerous branches filing for bankruptcy, close to 12,000 students, many attendees of Corinthian’s locations, are seeking help from the federal government in regards to their college student debt. “Students Ask Education Department to Discharge College Debt” by Anne Flaherty on September 3, 2015, for abcnews.go.com, shared the reasons for the students’ request.

Known as the “borrower’s defense,” students who believe they have been defrauded can ask the government to discharge any college student debt. Flaherty wrote, “Officials say they knew of five or so such cases in the past 20 years; some 4,140 have been filed since the Education Department’s June announcement that it would make the debt-relief process easier. Officials say an additional 7,815 Corinthian students have filed claims for debt-relief because their school closed.” 

Colleges as predatory lenders

The Department of Education began investigating Corinthian College for a range of infractions, including predatory loan practices, misleading job placement data and poor student training. Eighty-five of its campuses will be sold off as a result of the bankruptcy, while a dozen others simply will be closed. Corinthian operates Everest University, WyoTech and Heald College chains, as well. Ellen Meyers revealed more in “Corinthian Colleges Selloff: Is the For-Profit College Crackdown Working?” for The Christian Science Monitor on July 7, 2014.

Meyers quoted a Department of Education fact sheet, which stated, “Students at for-profit colleges represent only about 13 percent of the total higher education population, but about 31 percent of all student loans and nearly half of all loan defaults.” Recent figures indicate that not only do those enrolled at for-profit universities use more student loan money than students at public colleges, but they also default on their loans at a higher rate—22 percent within three years vs. 13 percent.

The facts about college student debt

To help assist with the crisis for those students affected by the closing of Corinthian College, the U.S. Department of Education’s Homeroom blog posted “For Corinthian Colleges Students: What You Need to Know about Debt Relief” by Cameron Brenchley.

If you or someone you know attended a Corinthian College campus, the Department of Education offered two options:

  • You can apply for a closed school loan discharge.
  • You can transfer any credits you have earned to another college in a comparable program. (If you opt to do this, you still may be able to seek some repayment of your previous loans.)

The site explained, “A closed school discharge means that 100 percent of the federal student loans you took out to attend the school that closed may be forgiven, including a reimbursement of amounts you already paid back.” Students should note, however, that if they pick the loan discharge option, they won’t be able to transfer any earned credits to another college or university.

Want to learn more about higher and adult education? Check out Questia—particularly the section on higher education administration

Are for-profit universities like Corinthian College damaging higher education in America? Let us know your thoughts in the comments.

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