Sens. Warren, Durbin, Brown, Reps. Jayapal and Takano Urge Department of Education to Discharge Debt for Defrauded Corinthian College Students
Washington D.C. — U.S. Senator Elizabeth Warren (D-Mass.), Senate Democratic Whip Dick Durbin (D-Ill.), Senator Sherrod Brown (D-Ohio), and U.S. Representatives Pramila Jaypal (D-Wash.) and Mark Takano (D-Calif.) wrote a letter to Secretary of Education Miguel Cardona, urging the Department of Education (ED) to swiftly discharge the loans of borrowers defrauded by predatory for-profit colleges and universities, including those operated by Corinthian College. Seven years after defrauded Corinthian College students were told their loans would be discharged, tens of thousands of borrowers have not received relief. The lawmakers asked ED for an explanation for this continued delay and an update on ED’s timeline for discharging these loans.
“For the estimated 350,000 students defrauded by Corinthian, which closed its campuses in 2015, the wait for debt cancellation has spanned three presidential administrations. This is despite findings by numerous state and federal law enforcement agencies, and ED itself, of Corinthian’s widespread fraud that left students with worthless degrees and mountains of debt,” wrote the lawmakers.
“ED has failed to make good on its promise to defrauded borrowers, and it is time for swift and broad action to right this wrong,” concluded the lawmakers.
According to ED’s own findings, Corinthian misrepresented job placement rates to students between 2010 and 2014; systematically lied to students that they were guaranteed employment; and falsely assured students that the credits they earned at Corinthian campuses would be transferable to other institutions. For-profit institutions have a long history of predatory recruitment tactics – according to one study, for-profit institutions enroll only about 10% of all college students but account for half of all student loan defaults. Black and Latino students are disproportionately impacted by for-profit institutions – they represent nearly half of all students who attended for-profit institutions despite only accounting for about a third of all college students.
An investigation by the Massachusetts Attorney General‘s Office found that the Everest Institute, one of Corinthian’s schools, lied to students about its programs and job placement rates, and subsequently sued Corinthian in 2014. In 2015, Massachusetts Attorney General Maura Healy filed a group claim on behalf of Everest students to ED, but ED failed to Act. In 2019, borrowers sued then-Secretary of Education Betsy Devos and ED, and a federal judge ordered ED to cancel debt for the students, which the Trump administration appealed. In 2021, the Biden administration decided to drop the appeal, paving the way for 7,200 Corinthian students to get their debt discharged.
However, instead of providing cheated borrowers with expeditious release, ED has instead placed the burden on borrowers, requiring each borrower to provide evidence that proves they were defrauded, despite ED’s evidence of widespread wrongdoing by Corinthian. As of August 2019, ED had received borrower defense applications from 130,556 Corinthian students, a little more than a third of the 350,000 students who are likely eligible.
In May 2020, the lawmakers introduced the Coronavirus Emergency Borrower Defense Act in recognition of the urgent need that borrowers have for their loans to be discharged. The lawmakers called on ED to swiftly fulfill its promise to discharge the loans of defrauded borrowers and asked ED to answer a series of questions about its plans to help Corinthian students and other defrauded borrowers no later than April 5th, 2022.
Senator Warren is one of the nation’s leading voices for student loan borrowers, holding companies accountable for predatory practices that harm and trap borrowers in years of debt and leading the call for student debt cancellation to boost our economy and help close the racial wealth gap for borrowers.
- Senator Warren, along with Senate Majority Leader Charles E. Schumer (D-N.Y.) and Representatives Pramila Jayapal (D-Wash.), Ayanna Pressley (D-Mass.), Ilhan Omar (D-Minn.), and Katie Porter (D-Calif.) led more than 80 colleagues in a bicameral letter to the Department of Education calling for it to release the memo outlining the Biden administration’s legal authority to cancel federal student loan debt and immediately cancel up to $50,000 of debt for Federal student loan borrowers.
- Senator Warren, along with Senate Majority Leader Charles E. Schumer (D-N.Y.) and Representative Ayanna Pressley (D-Mass.) released new analysis showing that resuming student loan payments would strip $85 billion every year from the economy.
- Senator Warren, along with Senators Van Hollen (D-Md.), Blumenthal (D-Conn.), and Smith (D-Minn.), sent letters to four federal loan servicers, requesting information on their plans to support borrowers when student loan payments resume.
- Senator Warren, along with Senators Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.), Tina Smith (D-Minn.), and Chris Van Hollen (D-Md.) sent a letter to Maximus, the company that is assuming Navient’s federal student loans servicing contract, questioning its troubling history and seeking assurances that borrowers will receive appropriate services and protections during the transition.
- Senator Warren, along with Senators Cory A. Booker (D-N.J.), Sherrod Brown (D-Ohio), Bernard Sanders (I-Vt.), Richard Blumenthal (D-Conn.), Tina Smith (D-Minn.), Chris Van Hollen (D-Md.), Tammy Baldwin (D-Wis.), and Edward J. Markey (D-Mass.) sent a letter to the Department of Education urging Secretary Cardona to use his authority to automatically remove all student loan borrowers in default.
- Senator Warren, along with Senators Van Hollen, Blumenthal, Brown, Smith, Edward J. Markey (D-Mass.), and Robert Menendez (D- NJ.) sent letters to the heads of Pennsylvania Higher Education Assistance Agency, Granite State, and Navient calling on them to correct past errors with borrowers’ accounts and address growing concerns over their preparedness to transfer millions of borrowers to new servicers.
- Senator Warren, along with Senator Edward J. Markey (D-Mass.) and Representative Ayanna Pressley (D-Mass.), released a report that detailed the ongoing failures of the Public Service Loan Forgiveness program for public servants in Massachusetts.
- At a hearing in July 2021, Senator Warren pushed for borrower protections after a major student loan servicing shakeup.
- In July 2021, Senator Warren released a statement regarding the end of the Pennsylvania Higher Education Assistance Agency's (PHEAA) contract servicing student loans with the Department of Education .
- In June 24, 2021, Senator Warren and John Kennedy (R-La.) called on PHEAA CEO to address concerns about false and misleading statements made during a subcommittee hearing on student loans, which was chaired by Senator Warren.
- In May 2021, Senator Warren led her colleagues in sending a letter requesting information about the steps the Department of Education and the Office of Federal Student Aid (FSA) are taking to help transition millions of federal student loan borrowers back into repayment ahead of the scheduled end to the pause on student loan payments and interest in September.
- In April 2021, Senators Warren and Raphael Warnock (D-Ga.) led a group of colleagues in a letter to Education Secretary Miguel Cardona urging the Department of Education to take swift action to automatically remove all federally-held student loan borrowers from default.
- That same month at her first hearing as chair of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, Senator Warren called out PHEAA for its mismanagement of the Public Student Loan Forgiveness Program.
- Senator Warren also questioned Jack Remondi, CEO of Navient, on the company's long history of abusive and misleading behavior towards borrowers and their profiting off the broken student loan system.
- Senator Warren has also been continuing her calls for President Biden to use his existing authority to cancel $50,000 in student debt and highlighted data that she obtained from the Education Department revealing the benefit of student debt cancellation.
- In March 2021, Senators Warren and Bob Menendez (D-N.J.) applauded the passage of their Student Loan Tax Relief Act as part of the American Rescue Plan. The provision makes any student loan forgiveness tax-free, ensuring borrowers whose debt is fully or partially forgiven are not saddled with thousands of dollars in surprise taxes. During her time in the Senate, she has helped return tens of millions of dollars tax-free to students cheated by for-profit colleges.
- She demanded that the Department of Education hold student loan servicer, Great Lakes Education Loan Services, Inc., accountable for CARES Act blunder that likely lowered credit scores for millions of borrowers.
- She has worked with House Majority Whip James E. Clyburn (D-S.C.) to close the racial wealth gap by introducing legislation, the Student Loan Debt Relief Act, which would cancel student loan debt for 42 million Americans.
- She prioritized student debt relief and fought to lower student loan interest rates, introducing the Bank on Students Loan Fairness Act as her first bill in Congress.
- She conducted rigorous oversight of the for-profit college industry and helped secure three-quarters of a billion dollars in debt relief for students who were cheated by predatory for-profit colleges, including 4,500 Massachusetts students and more than 28,000 students across the country.
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