Through no fault of their own, tens of thousands of students were left high and dry — and broke — when the for-profit Corinthian Colleges closed and abandoned them. So U.S. Education Department officials are right to offer to forgive their federal student loans, even if it will be expensive. Separately, a U.S. District Court judge in Washington recently upheld new Obama administration rules that will deny federal funds to career training schools that produce graduates who can't afford to repay their student loans. These are both solid moves. But it will take more than reactive fixes to set straight an industry that too often saddles low-income students and veterans with expensive loans and subpar educations that are not worth the time and money.
Earlier this month, Education Secretary Arne Duncan announced a debt relief program that will allow loan forgiveness for former Corinthian students. The government typically allows students to discharge federal student loans if they were attending a school when it shuttered or withdrew within 120 days of its closing. Duncan expanded the loan discharge date to June 20, 2014, for Corinthian students. Separately, students who believe they were victims of fraud, regardless of whether their schools closed, also are eligible for financial redress. In all, as many as 350,000 Corinthian students could receive as much as $3.5 billion in debt relief.
A behemoth in the for-profit college industry, Corinthian formerly had more than 110,000 students at its Heald College, Everest University and WyoTech campuses nationwide, according to the New York Times. The company has been under investigation by state and federal regulators for years on charges ranging from deceptive sales pitches to high-pressure recruiting and enrollment tactics. Their targets were often low-income or nontraditional students, who were lured by slick advertising campaigns and promises of a quick, quality education that would lead to a good-paying job. Last year, the Education Department forced Corinthian to sell most of its campuses. And in April, Corinthian closed its remaining campuses.
There remains a need for career training schools that provide solid educations and help nontraditional students get a leg up. But unscrupulous institutions such as Corinthian sully the entire industry and leave debt-ridden, poorly educated students as collateral damage. The Obama administration has sensibly sought to crack down on the industry and created new regulations that take effect on July 1 requiring schools to produce career-ready graduates or risk the elimination of federal student aid. Despite a legal challenge by an association representing the schools, a federal judge's ruling last week buttresses the government's authority to hold the schools to account. But there is more work to do.
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Education officials need to help Corinthian students navigate what is sure to be a complex application process for the debt reduction offer. The department's decision to hire a special master dedicated to borrower defense issues is a responsible first step for students and for proper fiscal management of the program.
Without question, bailing out defrauded, abandoned students is appropriate. But ultimately, government officials must tighten and enforce regulations on career training schools that receive federal financial aid. If they don't, taxpayers should not be expected to pick up the tab.