Editorials

Pursue the execs

The U.S. Department of Education has announced that it plans to forgive the federal loans of thousands upon thousands of students who attended Corinthian Colleges, only to be the victims of institutional behavior that left them without certificates of class completion, unable to get jobs and drowning in debt.

It’s the right thing for Education Secretary Arne Duncan to do. So many of these students were unwittingly drawn to the for-profit schools by recruiters’ rosy promises that they would secure their slice of the American Dream by enrolling. Those promises wilted for too many students who were taken in.

But those loans are the only thing that should be forgiven. All others must be held accountable for derailing the dreams of these students while, in all likelihood, defrauding them and the government. For its part, the Department of Education, too, was complicit in this farce.

The Education Department estimates say that, should all 350,000 Corinthian students who attended in the past five years have their loans forgiven, it could cost taxpayers up to $3.5 billion. That’s especially galling when so many students are unable to become employed and contributing members of society as they hoped, even with the debt burden lifted.

The process for debt relief won’t be easy for aggrieved students, and it shouldn’t be a piece of cake. As for-profit schools’ defenders assert, the conditions of enrollment were clear in the contractual agreement. Still.

Founded 20 years ago, Corinthian exploded into one of the largest for-profit education companies in the country, acquiring troubled vocational colleges. It also has been a magnet for federal and state regulators, who have launched investigations and filed lawsuits concerning allegations of inflating job-placement rates, deceptive marketing and predatory recruiting. Some charges have stuck. Like many for-profit schools, Corinthian targeted low-income students with few academic or job prospects.

In April, the Education Department fined Corinthian $30 million for its misrepresentations of placement rates, and most of its campuses have closed in accordance with an agreement with the department.

So, duped students stand to be made whole and taxpayers will assume the debt. But that can’t possibly be the end of the story.

The owners and executives who might be culpable should not be absolved by default. The Department of Justice should throw the full weight of its investigative authority into bringing accountability to this spectacular failure. Robyn Smith, an attorney with the National Consumer Law Center, told the Editorial Board that, “There is evidence that management knew about the inflated placement rates and were involved. An investigation is warranted.” Yes, let’s find out if they are any less criminally culpable than, say, super-fraudster Bernie Madoff, imprisoned for his misdeeds.

Ms. Smith successfully filed suit against Corinthian as deputy attorney general in California, winning a judgment that prohibited the school from engaging in misrepresentations.

The Department of Education, too, bears much of the blame. It is tasked with providing the student grants and loans that keep shaky for-profit schools afloat and also with enforcing the schools’ behavior. The ease of the former has eclipsed the diligence required by the latter, with disastrous results.

It’s a conflict that must be resolved.

  Comments