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After responding to Durbin’s calls since 2015, the Department of Education approved the blanket discharge of all remaining federal student loans for borrowers who attended predatory, for-profit Corinthian colleges.
WASHINGTON — U.S. Senate Majority Whip Dick Durbin (D-IL) delivered a speech in the Senate applauding the Department of Education’s recent decision to repay all remaining federal student loans for those who attended an imprisoned campus or run by predatory Corinthian Colleges. In April 2015, after Corinthian abruptly closed all of its schools, Durbin first urged the Department to issue widespread relief while standing outside a Corinthian-run school in Chicago with the Illinois Attorney General, Lisa Madigan.
In his remarks, Durbin called out Corinthian Colleges for its stingy student recruitment tactics.
“I believe they [for-profit colleges] have truly posed an unscrupulous threat to unsuspecting students, taxpayers, and the solvency of federal student aid programs. Corinthian Colleges sounds good, doesn’t it? He was one of them. One of the largest for-profit university enterprises and one of the worst. It operated over 100 campuses, including six in my home state of Illinois, under names like Everest Colleges, WyoTech, Heald Colleges. At its peak, Corinthian had over 110,000 students, raising over $1.4 billion from the federal treasury each year… How did Corinthian attract its students? He lied. He has invested heavily in marketing and advertising. This created a business model that relied heavily on predatory sales practices. It deliberately misled the students into taking on more debt than they could ever, ever repay,” Durbin started.
Durbin explained how these sales practices that lured students under false pretences led to a lawsuit, led by then-California Attorney General Kamala Harris. The California lawsuit was part of a series of lawsuits and investigations that ultimately resulted in the closure of all Corinthian colleges.
“In 2013, Vice President Kamala Harris, then California Attorney General, sued this company for predatory and deceptive business practices. This lawsuit was followed by investigations by four different federal agencies and more than 20 state attorneys general for various consumer frauds… And on April 26, 2015, the entire Corinthian Colleges house of cards came crashing down… The announcement left 16,000 students stunned and worried. how they would ever repay the debt they incurred and the degrees they could never complete,” Durbin said.
“In 2015, I called for widespread relief for borrowers defrauded by Corinthian. Last week, these borrowers finally received long-awaited relief. Seven years after they closed Corinthian, they finally got student loan relief. they took… In its biggest ever student loan forgiveness action, the Department of Education recognized the rot that was at the heart of Corinthian colleges and announced it would wipe out $5.8 billion. of student loan debt owed by 560,000 borrowers who attended the company’s for-profit schools…I commend Secretary of Education Cardona and President Biden for their leadership on this simple matter of justice,” Durbin continued.
Durbin then discussed additional solutions to the student debt crisis, including the possibility of repaying student loans in the event of bankruptcy. In August 2021, Durbin presented the bipartisan NEW BEGINNING through the Bankruptcy Actthat would restore the ability for distressed borrowers to seek federal student loan bankruptcy discharge after a ten-year waiting period.
“I also believe that we need to rethink the provisions of our federal bankruptcy laws that make student loan debt one of the few debts that cannot be discharged through bankruptcy proceedings…Bankruptcy should be allowed to be used as a last resort for borrowers who have nowhere else to turn,” Durbin said.
“It is in the national and economic interests of the United States to ensure that student loans are a prudent investment and to protect unsuspecting students from unscrupulous organizations like these for-profit colleges and universities,” Durbin concluded.
Video of Durbin’s remarks to the Senate is available here.
Audio of Durbin’s remarks to the Senate is available here.
Footage of Durbin’s remarks to the Senate is available here for broadcasters.
The Department of Education’s decision will provide $5.8 billion in relief through group release to 560,000 borrowers across the country. This relief will cover all borrowers who attended a Corinthian Colleges school from 1995 until its collapse in 2015, making it the largest loan discharge ever issued by the Department. Due to Corinthian Colleges systemic abuse and fraud, the Group Release will apply to all Borrowers, including those who have not submitted a Borrower Defense Request. Corinthian students who have already repaid some or all of their loans will be eligible for discounts.
At the time Corinthian Colleges closed, the for-profit college was receiving taxpayer money by participating in the federal Title IV program and still enrolling new students in several states. Corinthian was under investigation by the Securities and Exchange Commission, the Department of Justice and more than 20 state attorneys general, including in Illinois, for using misleading placement rates and marketing tactics predatory. They have been sued by the Consumer Financial Protection Bureau and the state attorneys general of California, Massachusetts and Wisconsin for false and misleading advertisements. During all this time, the institution has raised more than a billion taxpayer dollars a year.