MAINT STREET: Corinthian Students and the Department of Education in Student Loan Stand-off
Career College Central Summary:
Attempts to resolve the Corinthian Colleges fiasco hit a snag yesterday: while the for-profit college filed for bankruptcy, the student group Debt Collective and the Department of Education (ED) failed to come to an agreement on the write-off of federal loans to current and former students.
Papers submitted to a Delaware court indicated that Corinthian, in a Chapter 11 filing, has debts of $143 million and assets of $19.2 million. Court papers also revealed a $100 million loan to from Bank of America that was outstanding. Corinthian executives, including CEO Jack Massimino, were not believed to have filed for personal bankruptcy as a result of the Corinthian crack-up. A Corinthian spokesperson could not be reached for comment. According to Salary.com, Massimino's compensation for fiscal year 2013 was $3,017,859. Corinthian investors did not fare as well. The stock (ticker: COCO) closed at $0.01 per share yesterday. George Pressly, an attorney for Corinthian shareholders, could not be reached for comment.
Representatives for the Corinthian 100, which have been organized by the student group Debt Collective, abruptly ended talks with ED on Monday, taking a hard line that could threaten a settlement. In a statement, Undersecretary of Education Ted Mitchell said, "We agree strongly that students who have been victims of fraud by Corinthian Colleges must have all debt relief to which they are entitled." But that will fall short of a loan write-off for all students.
“The (ED) plan is designed to prevent rather than facilitate justice for students,” the student group said in a statement. “A class-wide discharge is the only way the Department can begin to take responsibility for aiding and abetting the scam. We will not meet with Secretary [Arne] Duncan until a purely individualized process for Corinthian students is off the table.”
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