NEW YORK TIMES: Questions of Cost in Plan to Aid Defrauded Students

Career College Central Summary:

  • The Department of Education’s announcement Monday of new debt-relief measures for defrauded former students of Corinthian Colleges, a large for-profit education company that is now in bankruptcy, raised a host of questions about how broadly those provisions would apply, what students would have to do to have their loans forgiven, and how large the ultimate cost to taxpayers might be.
  • The department said its plan for Corinthian students would apply to others who can show they were defrauded by their colleges. In theory, this could mean debt relief for hundreds of thousands of students who had attended for-profit colleges that engaged in deceptive practices, as well as for those who enrolled in, for example, a law school that falsely promised a high placement rate.
  • Secretary of Education Arne Duncan in Arlington, Va., in May. He said on Monday, “You’d have to be made of stone not to feel for these students.”Government to Forgive Student Loans at Corinthian CollegesJUNE 8, 2015
  • In practice, though, it is likely to help a far smaller pool, because claimants would have to show evidence that their institution had violated a state consumer-fraud law. Just what constitutes good evidence of this kind of claim is unclear.
  • As for the ultimate cost of the relief, the department estimated that, at worst, if every one of the 350,000 students enrolled at Corinthian since 2010 applied for debt relief, the price could be as high as $3.5 billion. Realistically, though, the sum will most likely be much smaller, experts said.
  • “Conservatively, I think we’re talking about a number that’s just shy of a billion dollars, $800 million or so, and certainly that would be much higher if opened up to everybody,” said David A. Bergeron, a former Education Department official who is now a vice president at the Center for American Progress, a policy group in Washington.

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