The Corinthian College Debacle: What It Means for its Students
Faced with dropping enrollment numbers as well as investigations from the Consumer Financial Protection Bureau, attorneys general in multiple states, and regulators from the Department of Education, Corinthian Colleges is on the verge of declaring bankruptcy. The charges against it include presenting false job placement data to prospective students in its marketing, altering student grades and attendance records, and questionable recruitment and student loan advisory practices. The federal government recently announced it would withhold some student aid from the company, causing a delay that the company claims necessitates the bankruptcy.
Corinthian Colleges owns more than 100 for-profit college campuses across the country, including Wyotech, Heald College, and Everest University. Its closure could have a serious impact on the 72,000 students enrolled. Here’s what they may have to look forward to.
A possible continuation in services
The school has stated that it plans to allow mot of its campuses and programs to continue serving students who are in the midst of earning their degrees. However, this plan may not be possible, depending on whether Corinthian can find a buyer or multiple buyers to cover the cost of operations. The company is less attractive to buyers now than ever, since enrollment numbers have dwindled.
Still, the Department of Education has been working with the company to introduce a gradual cessation of services that would not leave students in the lurch. The federal government has pledged $35 million in funds to help the school continue to provide services to as many enrolled students as possible.
Help with federal loans
The Department of Education recently negotiated a shutdown deal with the college aimed at reducing or eliminating the student loan burden for those who did not get to earn a college degree. Under the agreement, students enrolled in schools slated for closure can get a discharge of their federal loans if they cannot transfer to another school. Those who enrolled in the school after June 22 will be able to get a refund.
Defaulted private loans
Corinthian depended on federal student loans for a large portion of its income, but it also convinced many students to take out private loans. That’s because the law states that federal loans cannot comprise more than 90% of revenue for for-profit schools. It is unclear whether students who have a heavy burden of private student loans will also qualify for a discharge under the federal shutdown agreement. Those who don’t qualify may have to go through default if they can’t pay back the loans.
The need to transfer schools
Not all programs will be able to stay open, although it isn’t currently clear which ones will continue under the new bankruptcy deal. Some students will need to transfer, and that might be a challenge, especially if they’re transferring to not-for-profit accredited online collegesor traditional schools. Credits from for-profit colleges can be especially difficult to transfer.
The need to transfer to other Corinthian campuses
In some cases, students whose programs close may be able to transfer to other formerly Corinthian-owned campuses and programs that are staying open. They may also have to travel to other campuses to get certain services, such as job placement help.
It is difficult to say for sure how the students at Corinthian will be affected, as the bankruptcy plan has yet to be implemented. However, it is possible that many of the students with federal loans enrolled in Corinthian schools can qualify for discharges. It is also possible that many of the students will be able to complete their degrees, either at the schools they currently attend or at equivalent traditional or accredited online schools. Time will tell, however. At this point, the only thing known for sure is that the shutdown will have a big effect on thousands of college students.
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