Corinthian College Crisis
At its peak Corinthian Colleges had over 100 colleges throughout the United States and Canada, including Everest College campuses in Earth City, Kansas City, and Springfield. Last month Corinthian Colleges, Inc., a large for-profit post-secondary education company, announced it would cease operations in all remaining U.S. locations effective April 27, 2015. The closure of Corinthian has left 16,000 students in quite the predicament. Many have taken on burdensome student loans, and now their school is closed.
In response, the Department of Education (DOE) announced a plan to wipe the debt slate clean for all students that attended these schools, a move that potentially could cost taxpayers $3.6 billion. Secretary of Education Arne Duncan defended the plan saying, “You’d have to be made of stone not to feel for these students.”
While I agree wholeheartedly that it is more than a minor inconvenience to have your school close, this is the wrong course of action. Indeed, this plan is wrongheaded and will simply encourage more of the behavior that created this crisis in the first place.
First, there is no need to forgive loans for courses students have already completed. They did not spend their time at Corinthian schools in vain. These students are still eligible to transfer their credits to other schools and continue their educations. Countless universities have made it clear that they want to help and are willing to open their arms to students who take the initiative to transfer credits and continue their pathway toward a better life. Long Beach City College President Eloy Oakley summed it up perfectly back in April: “They have options and no matter what, at the end of the day, we want them to finish their education, stay in the community and become economic assets to the community.”
Unfortunately, one of the catches of the DOE’s plan is that closed-school debt relief is only available to students who have not transferred their credits to another university. This bailout encourages students to throw away the years they have dedicated to attaining a degree and bettering themselves.
Second, this is potentially the largest debt relief program the government has ever offered students, and it sets a bad precedent. Taxpayers should not be held accountable for the billions of dollars students borrow in full knowledge of the consequences. Most of these students never would have attended a Corinthian College if it were not for the government’s subsidization of college loans. This bailout essentially means students bear no risk when making college selections; they can easily obtain college loans, and the government will forgive them if things go badly.
The students of the now-defunct Corinthian Colleges certainly got a raw deal, but that is no reason to enact measures that will encourage the same type of behavior in the future.