Ultimately, several deals Corinthian had hoped to make didn’t happen. Corinthian’s CEO, Jack Massimino, said in a statement Sunday that “the current regulatory environment” prevented the company from ensuring “a seamless transition for our students.”
In late March, the Corinthian 15 announced that its membership had grown to 100. But Arne Duncan, the U.S. education secretary, told a group of education reporters last week that, while “everything’s on the table,” the department isn’t committing to forgive the Corinthian 100’s loans. “We’re trying to make up for some real wrongs at the back end,” he said. And ultimately, those 100 people likely account for just a fraction of the Corinthian students who failed to get the results they had anticipated; after all, as of last summer, Corinthian’s programs enrolled more than 70,000 students.
Corinthian’s dramatic downfall coincides with new efforts to give students more of a say in the business of for-profit higher ed. Senator Dick Durbin and Representative Maxine Waters, both Democrats, on Tuesday introduced legislation that would block federal funding from schools that restrict students from pursuing legal claims against them in court. According to the senators, if this proposal had already been in effect, former Corinthian students would’ve been able to seek remedies directly from the colleges.
Meanwhile, federal policymakers, including President Obama, have continually vowed to combat skyrocketing tuition—at for-profits and nonprofits alike—primarily by holding higher-education institutions accountable for student outcomes. How much debt does the average student leave with? How long does it take that student to graduate—if at all? How successful is that student after graduating? Essentially, colleges need to prove they’re giving students a solid return on investment. If the outcomes aren’t up to snuff, politicians warn, colleges make have to say goodbye to their federal funding, which largely comes in the form of financial aid to students. Democratic Senator Elizabeth Warren has made it her perennial priority to bring down student debt, though to little avail, while Republican Senator Lamar Alexander is set on making the financial-aid process simpler and more transparent. Meanwhile, higher-education accountability is slated to play a big role in next year’s elections; Hillary Clinton, for one, will soon roll out her much-anticipated plan for tackling the student-loan crisis.
Despite charging above-average tuition, Corinthian’s colleges, which in 2013 received nearly 85 percent of their revenue through federal loans and grants, weren’t producing the outcomes they had promised. In fact, most of the for-profit industry’s students rely on loans and grants to attend school, meaning the federal government is more or less bankrolling these institutions. In 2013, federal money accounted for more than 90 percent of the revenue at 27 for-profit colleges—exceeding the cap stipulated by the feds. If it turns out that those colleges violate the 90-percent threshold for a second year in a row, they could lose access to federal coffers. What’s more, a proposal in Obama’s 2016 budget would make veterans benefits (like GI bill assistance) subject to that threshold, meaning another 133 for-profit colleges would’ve failed to meet the requirement, according to a Center for Investigative Reporting analysis. By excluding these military benefits, the 90-percent threshold suffers from a “loophole” that is believed to incentivize for-profits to use predatory tactics and target military vets and their family members.
As Pauline Abernathy, the vice president of the Institute for College Access and Success, told me earlier this year, “if a college is a quality product at a competitive price then someone other than the federal government should be willing to fund it.”