Debt Relief for Students at “Abusive” For-Profit Schools

From the outside, the Everest Institute building in North Miami looks like nothing is amiss.

But inside, classrooms sit empty, along with a bulletin board that once identified "new future graduates."

Inspirational posters, a sign and an abandoned lab coat are all that tie what remains to Everest Institute, a subsidiary of the once-bustling, now-bankrupt Corinthian Colleges for-profit school empire.

But students saddled with loan debt from this and other Corinthian campuses have been given a lifeline by the U.S. Department of Education: discharge of their student debt.

Education Secretary Arne Duncan on Monday announced immediate relief for former Corinthian students, but that could extend to those of other schools that may have committed fraud.

Corinthian was found by DOE to have overstated the share of its graduates who obtained gainful employment, and inflated attendance figures. The enforcement action was part of an effort to crack down on what DOE calls “bad actors” in the for-profit higher education industry.

After being fined $30 million in April for misleading students, Corinthian filed for bankruptcy protection and closed down its campuses.

While Corinthian students will have the easiest path for now to having their student debt wiped off the books, the department is establishing a “broader system that will support students at other institutions who believe they have a defense to repayment,” according to a DOE fact sheet. Those whose loans would be forgiven include students who were “defrauded by their college under state law.”

The for-profit industry claims Corinthian’s actions do not represent their industry as whole, and that for-profit, career-oriented education is appropriate for many potential students.

But the DOE made several observations about for-profits: they cost four times as much as community colleges; 80 percent of for-profit students borrow money, compared to less than half of public students; and, while they constitute only 11 percent of higher education population, for-profit school borrowers are responsible for 44 percent of all student loan defaults.

To learn more about DOE’s loan forgiveness process, former Corinthian students can visit

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