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Financial News Bureau Says For-Profit Colleges Lied to Students A college education is supposed to open the doors to life- long careers and entry into America’s middle class. Yet, students that enrolled at one of the more than 100 Corinthian College campus- es across the country had college experiences charac- terized by predatory lending, illegal debt collec- tions, and one-day “career” jobs. Corinthian Colleges operate schools under the names of Heald College, Everest and Wyotech. On September 16, the Consumer Financial Protec- tion Bureau (CFPB) filed a lawsuit against the for-profit Corinthian Colleges, seek- ing $569 million in forgiveness of loans. An estimated 130,000 private loans students were entered into from July 21, 2011 to the present. March 2013 enrollments totaled about 74,000 students for all of its campuses. CFPB found that more than 60 percent of Corinthian students defaulted on their loans within three years. To encourage strong collection rates, CFPB alleges that Corinthian paid its staff bonuses on how well they got students to keep their loan payments current. Informing instruc- tors about overdue debts, meetings with the campus president and pulling stu- dents from class were only three of the tactics used to shame students. If students became late on loan pay- ments, they were denied computer access, prevented from buying books, blocked R ESPONSIBLE L ENDING Charlene Crowell associate degree came with a price tag ranging from $33,000 to $43,000. The costs for a bachelor’s degree ran higher from $60,000 to $75,000. To cover tuition and fees, students were financially forced into the college’s “Genesis loans,” created in concert with investment banks and financial institu- tions. These loans were much more expensive than federal loans. In July 2011, the Genesis loan interest rate was about 15 percent with an additional loan orig- ination fee of 6 percent. At the same time, federal stu- dent interest rates ranged from signing up for classes and even held diplomas until repayments became current. CFPB said even more abuses were inflicted on Corinthian students who managed to graduate. Although the schools direct- ed students to its ‘career services office,’ only a job postings list was provided. In other instances, Corinthi- an paid legitimate employers to hire its gradu- ates on a temporary basis, and then counted these jobs as part of the school’s “career” placement – even if the job lasted only a day. The legal action taken by CFPB is not the only one Corinthian Colleges faces. This June, the Department of Education increased its financial oversight after Corinthian failed to address concerns about its practices, including falsifying job placement data used in mar- keting claims to prospective students and allegations of altered grades and atten- dance. The Department also imposed a 21-day waiting period before Corinthian could draw down federal student aid revenues tied to enrollment. A few weeks later in July, the Department of Education appointed a monitor empowered to have full and complete access to Corinthian personnel and budgets. Additionally, Corinthian is also being investigated by 20 state attorneys general and received a federal grand jury subpoena in Florida, and another from Georgia. The Peach State is examin- ing the colleges’ job placement, attendance and graduation, while the Sun- shine State wants to know more about employee mis- conduct and student aid funds. A web-based resource from Student Loan Borrow- er Assistance is available for current or former Corinthi- an students to better understand refunds, dis- charge rights and more. ‘We believe Corinthian lured in consumers with lies about their job prospects, sold high-cost loans, and then harassed students while still in school’ “We believe Corinthian lured in consumers with lies about their job prospects upon graduation, sold high- cost loans to pay for that false hope, and then harassed students for over- due debts while they were still in school,” said Richard Cordray, CFPB Director. CFPB alleges that Corinthian used bogus advertising targeted to low- income students who were often the first generation of their family to attend col- lege. Exploiting their limited exposure to the world of higher education, ads promised job prospects and careers that never hap- pened. Further, its tuition costs were so high that an from 3 to 7 percent, depend- ing upon the type of loan, and had either low or no charges for origination. Corinthian needed its loan program in order to comply with a federal law that required no more than 90 percent of an institution’s funding to come from feder- al sources. The lawsuit alleges that Corinthian knew that most students would default. Worst of all, loan repay- ment on most of the private-label loans began as soon as students started classes. By comparison, federal loan repayments typically begin six months after students either gradu- ate or drop out of school. Ella’s Kitchen formerly Soup & Soap SOUL FOOD ...one taste will bring you back. BREAKFAST • LUNCH SPECIALS DINNER • SEAFOOD • DESSERT “Finally!! 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