BLOOMBERG BUSINESSWEEK: Loan Collector’s Corinthian Purchase Hurts Students, Critics Say

Career College Central Summary:

  • Corinthian Colleges Inc. (COCO:US) students will be hurt by the planned sale of 56 campuses to college-loan debt collector Educational Credit Management Corp., consumer and legal advocates said.
  • ECMC’s planned purchase doesn’t give students the option of discharging their debt if they leave their programs, even though multiple federal and state agencies have alleged Corinthian inflated its job placement rates, according to a letter today from 46 advocacy groups. The letter was sent to U.S. Education Secretary Arne Duncan, Attorney General Eric Holder, and Consumer Financial Protection Bureau Director Richard Cordray.
  • “The terms of the proposed sale to ECMC would not give students the choice of completing or a fresh start, while leaving the campuses in the hands of a troubled entity with no educational experience,” according to the letter.
  • The letter was signed by groups including the NAACP, the Institute for College Access & Success, Public Citizen, National Education Association and Veterans Student Loan Relief Fund.
  • Kent Jenkins, a spokesman for Santa Ana, California-based Corinthian, said that many of the groups have made previous allegations against the company that haven’t been proven in court or by any neutral fact-finding body.
  • “Repeating those allegations yet again does not make them any more true or credible,” Jenkins said. ’
  • ECMC has worked for more than 20 years to help families plan and pay for college, said Dave Hawn, president and chief executive officer of the Oakdale, Minnesota-based company. ECMC is acquiring Corinthian’s campuses in hopes of helping students complete their studies and start careers, he said.
  • Dorie Nolt, an Education Department spokeswoman, didn’t have an immediate comment.
  • A group of Democratic U.S. senators led by Elizabeth Warren of Massachusetts sent a letter Dec. 9 urging Duncan to discharge federal loans of Corinthian students. The for-profit company, which had about 70,000 students as of July, took in $1 billion in federal student grants and loans last year.

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