In Speech On Senate Floor, Durbin Applauds Department Of Education For Group Discharge Of Student Loans For Borrowers Who Attended Now-Shuttered Corinthian Colleges
After heeding Durbin’s calls since 2015, the Department of Education approved widespread discharge of all remaining federal student loans for borrowers who attended predatory, for-profit Corinthian Colleges
WASHINGTON – U.S. Senate Majority Whip Dick Durbin (D-IL) delivered a speech on the Senator floor applauding the Department of Education’s recent decision to discharge all remaining federal student loans for those who attended any campus owned or run by the predatory Corinthian Colleges. In April 2015, after Corinthian abruptly closed all of its schools, Durbin first urged the Department to issue widespread relief as he stood in front of a Corinthian-operated school in Chicago with then-Illinois Attorney General Lisa Madigan.
In his remarks, Durbin called out Corinthian Colleges for its avaricious tactics to recruit students.
“I believe that they [for-profit colleges] have really posed an unscrupulous threat to unsuspecting students, to taxpayers, and to the solvency of federal student aid programs. Corinthian Colleges, sounds great doesn't it? That was one of them. One of the largest for-profit college companies and one of the worst. It operated more than 100 campuses, including six in my home state of Illinois, under names like Everest Colleges, WyoTech, Heald Colleges. At its peak, Corinthian enrolled more than 110,000 students, raking in a more than $1.4 billion sum from the federal treasury every year… How did Corinthian attract its students? It lied. It invested heavily in marketing and advertising. It created a business model that relied heavily on predatory sales practices. It deliberately misled students into taking on more debt than they could ever, ever repay,” Durbin began.
Durbin spoke about how these sales practices that drew students in under false pretenses led to a lawsuit, headed by then-California Attorney General Kamala Harris. The California lawsuit was one in a string of lawsuits and investigations that ultimately resulted in the closure of all Corinthian Colleges.
“In 2013, Vice President Kamala Harris, who was then California’s Attorney General, sued this company for predatory and deceptive business practices. That lawsuit was followed by investigations by four different federal agencies and more than 20 State Attorneys General for a variety of consumer fraud… And on April 26, 2015, the whole Corinthian Colleges house of cards collapsed…The announcement left 16,000 students stunned and worried about how they would ever pay off the debt they incurred and about the degrees they would never be able to finish,” Durbin said.
“Back in 2015, I called for widespread relief for borrowers defrauded by Corinthian. Last week, these borrowers finally received some long-overdue relief. Seven years after they closed Corinthian, they finally got relief from the student loans they incurred…In its largest student loan forgiveness action ever, the Education Department recognized the rot that was at the core of Corinthian Colleges and announced it was going to wipe out $5.8 billion in student loan debt owed by 560,000 borrowers who attended the company’s for-profit schools…I applaud Education Secretary Cardona and President Biden for their leadership on this simple issue of justice,” Durbin continued.
Durbin went on to discuss additional solutions to the student debt crisis, including the option to discharge student loans in bankruptcy. In August 2021, Durbin introduced the bipartisan FRESH START Through Bankruptcy Act, which would restore the ability for struggling borrowers to seek a bankruptcy discharge for federal student loans after a waiting period of ten years.
“I also believe that we need to re-think the provisions in our federal bankruptcy laws that make student loan debt one of the few debts that cannot be discharged in bankruptcy proceedings…Bankruptcy should be allowed to be used as a last resort for borrowers who have no other place to turn,” Durbin said.
“It is in America’s national and economic interest to make sure that student loans are a prudent investment and to protect unsuspecting students from unscrupulous organizations like these for-profit colleges and universities,” Durbin concluded.
Video of Durbin’s remarks on the Senate floor is available here.
Audio of Durbin’s remarks on the Senate floor is available here.
Footage of Durbin’s remarks on the Senate floor is available here for TV Stations.
The Department of Education’s decision will provide $5.8 billion in relief through group discharge for 560,000 borrowers across the country. This relief will cover all borrowers who attended any Corinthian Colleges school from 1995 to its collapse in 2015, making this the largest loan discharge the Department has ever made. Due to Corinthian Colleges’ systemic abuse and fraud, the group discharge will apply to all borrowers, including those who did not submit a borrower defense claim. Corinthian students who have already repaid some or all of their loans will be eligible for rebates.
At the time of Corinthian Colleges’ closure, the for-profit college was receiving taxpayer dollars by participating in the federal Title IV program and still enrolling new students in several states. Corinthian was under investigation by the Securities and Exchange Commission, the Department of Justice, and more than 20 state Attorneys General, including in Illinois, for using misleading job placement rates and predatory marketing tactics. They were sued by the Consumer Financial Protection Bureau and the state Attorneys General of California, Massachusetts, and Wisconsin for false and misleading advertisements. All the while, the institution raked in more than a billion dollars from taxpayers a year.
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