Corinthian Colleges Debt Relief: Investigation Finds More Students Eligible For Faster Loan Forgiveness

More students who attended the now-collapsed for-profit education chain Corinthian Colleges Inc. are eligible for speedier debt relief for their student loans because their schools inflated job placement statistics, federal and state officials said Tuesday. Approximately 85,000 students can now apply for streamlined loan forgiveness based on the results of investigations by the Department of Education and California Attorney General Kamala Harris.

Corinthian's California campuses that operated under the Everest and WyoTech brands, as well as Everest University online programs based in Florida, "widely misrepresented" how well graduates fared in landing jobs, officials said. The findings allow students to claim relief for money they invested in a company that wooed them through false advertising and deceptive marketing tactics, according to Harris, whose office filed a civil lawsuit against Corinthian in 2013. The company, Harris added, went after single mothers, veterans and low-income earners with a marketing plan that described targets as "isolated" individuals with "low self-esteem and few people in their lives who care about them."

Harris would not confirm or deny whether her office is conducting a criminal investigation related to Corinthian. "There has, without any question, been a lot of harm and damage to students who were just trying to get an education," she said on a conference call with reporters.

Corinthian's high-profile implosion over the past year has underscored to Obama administration regulators the need to reform a for-profit college sector that is both heavily reliant on taxpayer-funded student aid and rife with allegations that schools have tricked students into enrolling in shoddy programs. Nearly 350,000 federal student loan borrowers have taken out some $3.5 billion to attend Corinthian schools since 2010, and the company filed for bankruptcy protection in May amid multiple government investigations.

On Monday, another for-profit college company, Education Management Corp. (EDMC), resolved allegations that it ran a high-pressure boiler room to unlawfully recruit students. EDMC agreed to forgive $102.8 million in student loans, and separately agreed to pay $95.5 million to settle multiple whistleblower suits with the Department of Justice and state regulators. The company did not admit to wrongdoing under the settlement.

In the case of Corinthian, the Department of Education has been investigating the company's schools in search of evidence of wrongdoing that, in turn, large numbers of former students could use to clear their debts. By law, students who attended a school that engaged in fraud can claim a "borrower's defense to repayment" of their loans.

According to the probe's latest findings, WyoTech's Long Beach, California, campus, for example, told students its automotive technician diploma had a job placement rate of 80 percent when, in reality, the figure was 26 percent. Everest's Ontario, California, campus told students that the medical assistant diploma had a 78 percent success rate with employment, but actually placed only 52 percent of students in jobs.

The department's investigation into Corinthian remains ongoing. "We are working as hard as we can to make sure every student who is eligible for relief gets relief," said Department of Education Under Secretary Ted Mitchell.