Senators request debt forgiveness for Corinthian students

Those who were the victim of illegal activity should not have to pay, they argue

A group of Senate Democrats is urging the Department of Education to forgive some of the outstanding loans owed by students who attended the embattled for-profit Corinthian Colleges.

The push comes after Corinthian sold 56 of its 107 campuses to Educational Credit Management Corporation (ECMC) last month, stirring up concerns from consumer advocates. Corinthian sold the campuses as part of a deal reached with the federal government this summer to dissolve itself.

The company has faced a series of lawsuits, with allegations ranging from faking alumni data to misleading students about graduates' job prospects. Critics say Corinthian's sale to ECMC was inappropriate because the company has no experience in instruction and collects student debt on behalf of the government.

Related: For-profit's proposed sale to credit management firm worries consumer advocates

Thirteen Senate Democrats wrote the Department of Education and asked it to forgive the debt of students engaged in lawsuits against the company. "When students take on loans to pay for college," they wrote, "they are making a serious financial decision that will affect them for years to come… If colleges fail to hold up their end of the bargain—if they break the law in ways that bear on their students’ educational experience or finances—students should not literally be stuck paying the price."

Kent Jenkins, a Corinthian spokesperson, responded by arguing that the company should not  be "presumed guilty" before Corinthian has had a chance to defend itself. "The authors of this letter take the deeply unjust position that the federal government should act on the basis of unproven allegations which are being vigorously contested in court," he said.

For its part, the Department of Education declined to specifically respond to the senators' request. Spokesperson Denise Horn said the agency appreciates "the senators’ concerns for the welfare of Corinthian students" and will continue to advocate for the interests of students (Douglas-Gabriel, Washington Post, 12/10; Zibel, Wall Street Journal [subscription required], 12/10).

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