Still, while the Consumer Financial Protection Bureau’s court victory may assuage some of the concern that the government is perpetuating the problems with for-profit colleges, in reality it doesn’t ensure that all the Corinthian students will be relieved of their debt. After the lawsuit was issued last fall, Corinthian Colleges filed for bankruptcy, effectively rendering all of its assets unavailable for the repayment. According to The Washington Post, at the time of its bankruptcy filing Corinthian had less than $20 million in assets—but its liquidation plan dissolved all of those assets.
As part of a resolution package agreed upon last year, the Department of Education forced Corinthian to sell or close its schools. And initially, that went according to plan: As a result of the sale of 56 schools to ECMC Group, thousands of students have had their debt forgiven, and more have had reductions to their balances. The Department of Education, however, is still responsible for parsing through the hundreds of requests filed by other students that accuse Corinthian of fraud.
Looking ahead, the recent ruling, combined with the college’s shutdown, could persuade the Department of Education to forgive more students’ federal loan debt and further soften its stance on debt forgiveness. Currently, federal law gives student borrowers the right to apply for total relief if they can prove schools misled them into taking out federal student loans—a provision on which the Obama administration has already acted. Shortly after Corinthian Colleges closed the last of their schools, the administration decided to relieve the debt of about 3,000 borrowers who attended those schools to compensate them for the abusive practices they endured there. Still, others have to apply for relief individually and submit hard-to-come-by documents from shut-down schools, meaning that some students will inherently be left out.
All in all, Corinthian students have, according to the Post, borrowed about $3.2 billion in federal loans since 2010. As of August, close to 8,000 Corinthian students had applied for loan forgiveness, a little less than half of whom have been approved.
The Atlantic’s Gillian White has reported that for-profit colleges have risen in popularity since the recession of 2008, and their attendees are more vulnerable to these types of schemes for various reasons: They are typically older, have lower incomes, are more likely to be considered financially independent. These borrowers are more likely to default on the loans they took out to attend for-profit colleges, often because of the institutions’ predatory practices. Students at for-profit colleges represent only about 11 percent of all postsecondary students, but 44 percent of all federal student-loan defaults.
In 2000, only one of the 25 U.S. colleges and universities where students held the most student-loan debt was a for-profit, and that number jumped to 13 in in 2014. “The amount of debt owed by those attending for-profit colleges has grown from $39 billion in 2000 to $229 billion in 2014—which is more attributable to increases in the rate of borrowing at those schools than to increases in enrollment,” White wrote.