Feds Announce Debt-Relief Program For Defrauded Corinthian Students

Shalaan Williams of Dorchester has waited a long time for today’s news that her loans will be forgiven.

“Oh my goodness. I can finally laugh again,” said Williams, laughing, shortly after finding out she would be eligible for student loan forgiveness.

Williams enrolled at Corinthian’s Everest Institute in Boston four years ago, after seeing ads on television. She says the advertised job placement rates — now found to have been misleading — were a motivating factor.

Williams says once she got to the campus, recruiters convinced her to take out $21,000 in federal student loans for a medical assistant certificate.

Earlier: Former Corinthian Students Hope For Debt Relief

Williams is now employed but, upon her graduation, couldn’t find a job at one of Boston’s many hospitals.

“I had no money at all. I had a brand new baby as soon as a graduated my son was two months old. Like I didn’t have any extra money to pay these bills. So basically my student loans were delinquent as soon as they hit,” said Williams.

On Friday, the Education Department announced Williams and thousands of other students won’t have to pay back those loans.

So far, the Department has approved loan discharges for 8,800 Corinthian students nationwide, and Education Secretary John King says many more are now eligible.

“When Americans invest their time, their money, their energy, they have a right to expect that they will graduate with a high-quality degree that will allow them to be competitive for a twenty-first century economy,” said King.

The Department predicts loan forgiveness for those eligible could take a while, but King says it will eventually happen.

“Unfortunately we have institutions like Corinthian that have been motivated more by profit than by the interests of students,” said King.

Earlier: Under Pressure, Education Department Creates Unit To Protect Student Borrowers

Nearly two years ago, the Education Department stopped funding Corinthian after the for-profit giant admitted it had fudged its job-placement figures. Corinthian collapsed and taxpayers were left holding the bag.

A recent investigation by California’s attorney general found Corinthian targeted homeless people and then helped them get loans they couldn’t pay back.

“We have allowed some of our most vulnerable people to get ripped off and saddled with debt for life,” said Barmak Nassirian, a federal student aid expert at American Association of State Colleges and Universities.

Nassirian is encouraged by today’s announcement, even though he thinks it’s too little, too late.

“We waited for them to commit the fraud, to cash the check, to go out of business and even then it took us almost a year to finally admit, ‘Oh, I think there might have been some fraud going on here,’” said Nassirian.

Nassirian says Corinthian executives should be held accountable.

“The people who did this are multimillionaires and not a dime will be recovered from them. That should be an outrage,” said Nassirian.

Nassirian points out Corinthian isn’t alone: some but certainly not all for-profit colleges are engaging in similar behavior and, he says, triage after the disaster only goes so far to prevent future disasters.

[Cross-posted at On Campus: the WGBH News Higher Education Blog]

Kirk Carapezza

Kirk Carapezza is the lead reporter for On Campus. Kirk has reported for Wisconsin Public Radio in Madison, Wis., and Vermont Public Radio in Montpelier, Vt. He's been a writer and producer at WBUR in Boston; a teacher and coach at Nativity Preparatory School in New Bedford, Mass.; a Fenway Park tour guide; and a tourist abroad.

Kirk received his B.A. from the College of the Holy Cross and earned his M.S. from Columbia University's Graduate School of Journalism. When he's not reporting or editing stories on campus, you can find him posting K's on the Wall at Fenway.