Senators take accreditors to task for letting Corinthian slide

The agency looked the other way, 'now students and taxpayers are stuck with the bill'

Democratic senators berated accreditors at a HELP Committee hearing on Wednesday, calling out the president of Corinthian Colleges Inc.'s agency for not shutting the company down.

The Accrediting Council for Independent Colleges and Schools maintained Corinthian's accreditation "right up to the minute they closed," says Sen. Elizabeth Warren (D-Massachusetts).

"The accrediting agency continued to look the other way, and now students and taxpayers are stuck with the bill," she says.

In response, agency president Albert Gray stated his group did not withdraw accreditation because "our council makes recommendations based on facts, not allegations."

Background

The Education Department announced this month that it will forgive federal loans for former Corinthian students and appoint a "special master" to develop processes to apply for debt relief.

In late April, embattled for-profit Corinthian Colleges Inc. announced it would cease operations and close all remaining campuses, displacing around 16,000 students.

The announcement came shortly after the Department of Education levied a $29.7 million fine on the company's Heald College system for allegedly inflating the job-placement statistics of graduates. On top of that, the California Bureau for Private Postsecondary Education had ordered Corinthian to stop enrolling new students at two locations in California.

Previously, students who took out private loans issued by Corinthian had a significant portion of their debt forgiven as the result of an ongoing lawsuit between the company and the Consumer Financial Protection Bureau.

Potential outcomes

The loan forgiveness may have a lasting impact on who is eligible for such relief.

"If the department goes overboard in forgiving loans, it could undermine the financial and political viability of the student-loan system," says David Bergeron, senior fellow at the Center for American Progress, a left-leaning think tank.

Yet others say the threat of widespread demand for loan discharges is unrealistic. The major issue stems instead from what standard of proof the Education Department will require for loan forgiveness. For example, multiple for-profit college companies have settled out of court with state attorneys generals—but the settlement language does not contain confessions of wrongdoing. Whether or not those may be used to grant a loan discharge remains to be seen.

Some say they are concerned the Education Department's dual role of protecting students and saving taxpayers' money may be at odds.

Yet Warren says she remains unconcerned. "If they don't want taxpayers to pay for dischargers when students get cheated, [department officials] should invest the time and resources early to make sure predatory schools never cheat those students in the first place" (Blumenstyk, The Chronicle of Higher Education, 6/18 [subscription required]).

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