Congresswoman Jackie Speier met with Bay Area college administrators this morning to discuss the lack of federal oversight that led up to the abrupt closure of for-profit college franchise Corinthian Colleges Inc. and its 28 campuses, including Heald College in San Francisco, last week.
Speier (D-San Francisco/San Mateo) spoke with college administrators today about opportunities for roughly 16,000 students who were negatively impacted by the closure of Corinthian Colleges. Administrators at non-profit community and state colleges offered their support to displaced students who want to transfer in or start their education anew.
The closure of Corinthian Colleges’ 28 campuses last Monday came just two weeks after the U.S. Department of Education levied a $30 million fine on the company. The federal government concluded that Corinthian Colleges had misled students about job placement opportunities, graduation rates and loan repayment rates.
On Monday, a week after its closure, Corinthian Colleges filed for bankruptcy, according to the U.S. Bankruptcy Court in Delaware.
Speier compared the company’s predatory lending program that impacted thousands of students at Corinthian Colleges to the predatory lending programs that led up to the 2008 financial meltdown.
She said the company saddled students with a horrific amount of debt, just as subprime mortgage lenders did.
“I mean they were a fraud,” Speier said of Corinthian Colleges today.
Speier explained that for-profit college franchises across the country need to be better regulated and that the U.S. Department of Education needs to be given the teeth to prevent exploitation of students before it happens again.
However, because of the heavy hand and deep pockets of for-profit schools, Speier said any regulations against them have been “watered down” on a national level.
She said the U.S. Department of Education’s most recent attempts to create accountability and oversight of for-profit colleges were defeated.
According to Speier, Corinthian Colleges alone spent $600,000 on lobbyists last year, and over the course of roughly the last six years, “they have given over $1 million in campaign contributions to federal candidates.”
The congresswoman pointed out that 2016 presidential candidate, Florida Senator Marco Rubio, is among those who have received campaign contributions from Corinthian Colleges.
Students who were enrolled at Corinthian Colleges at the time of their closure do have a couple options, however. They can choose to transfer credits to other institutions or start anew at another institution. If they start anew that will have their student debts extinguished, according to the congresswoman.
“It’s a very twisted situation,” Speier said, explaining that those students who do not want to start fresh and who choose to transfer are currently ineligible for loan forgiveness.
Esther Howard, a 24-year-old South San Francisco resident and mother of three children, was enrolled at Heald College in San Francisco when Corinthian Colleges shuttered last week.
Howard said she had been studying at Heald College for two years and had only three months left before graduating from a medical assistant program.
With top grades, Howard received a medical assistant certificate and landed a solid job with a private practice at St. Mary’s Medical Center, but she said she has racked up roughly $50,000 in loans while at Heald College and has not gotten her degree.
“I’m not going to say the education was bad, the education was great,” Howard said, adding that the problem was with the administration.
She said the administration, not the teachers, were to blame.
Howard described incredibly supportive teachers who taught her a great deal. While she doesn’t regret her decision to enroll at Heald College, she said she had no idea that it was a for-profit college and that there were less expensive options.
Speaking with representatives from San Francisco State University, City College of San Francisco and the San Mateo County Community College District today, Howard listened to her educational options and said she was leaning toward starting her degree over at a community college so that she will be eligible to get rid of her $50,000 debt.
Howard just discovered that academic credits at CCSF are only $46 a unit and additional grants could be made available to her. She said if she had known such information two years ago she would have started at a community college from the beginning.
“I didn’t know anything about college and just wanted something better for my children,” Howard said today.
Tuition and fees for some Corinthian programs were more than five times the cost of similar programs at public colleges. Internal documents obtained by the federal Consumer Financial Protection Bureau showed most students came from low-income families and were the first in their families to seek an education beyond high school.
California Attorney General Kamala Harris said she filed a complaint in 2013 alleging that Corinthian was targeting vulnerable populations and doing so by using false advertisements and aggressive marketing campaigns that misrepresented job placement rates and school programs.
In September, the CFPB sued Corinthian for its allegedly illegal predatory lending program.
Harris said following the closures last week that while they were unfortunate for students, at least they would be able to “get out from under the mountains of debt Corinthian imposed upon them through its lies.”
She said federal and state regulators acted to prevent taxpayer dollars from flowing to Corinthian, which misled students and investors and preyed on the educational dreams of vulnerable people such as low-income individuals, single mothers and U.S. military veterans.
Corinthian’s chief executive officer, Jack Massimino, said in a letter to students posted on the school’s website, that Corinthian tried to find a qualified buyer to purchase its remaining campuses and keep the schools open. He said that as a result of “recent state and federal regulatory actions,” the company was unable to complete the sale and felt the only option was, after 152 years of operation, to close its doors permanently.
Speier said today that the federal government must stand up to lobbyists and better protect taxpayers from predatory companies.
She said that on a federal level, schools with high student loan default and low graduation rates need to be investigated and held accountable.
Corinthian Colleges lied about their rates and they were caught, Speier said, but she argued that other for-profit colleges in other states need to be held accountable as well.
Speier said the federal government should act immediately to ensure oversight on a national level to protect all students from predatory behavior but said “piercing the corporate veil” will be a challenge, especially when these companies spend aggressively on lobbying.
Hannah Albarazi, Bay City News