Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

FOR IMMEDIATE RELEASE: 
Apr 9 2015

SEATTLE — Attorney General Bob Ferguson today urged the U.S. Department of Education to immediately relieve the debt burden of thousands of students who attended Corinthian Colleges, joining with several other state attorneys general.

Ferguson and his colleagues signed a letter calling on the Department to relieve Corinthian students of their obligation to repay their federal student loans, as well as establish clear systems to help student borrowers get relief when for-profit schools break state law.

Corinthian owned and operated six Everest College campuses, enrolling some 3,000 students across Washington, until February, when their sale to Zenith Education Group was finalized. Zenith transitioned the schools from for-profit to nonprofit status.

“While multiple actions and investigations to hold Corinthian accountable for its deceptive practices continue, the students who were victimized need help now,” Ferguson said. “I am fighting to protect students, many of whom are veterans or low income, from schools that don’t play by the rules, and I’m asking the Department of Education to join the effort.”

The Higher Education Act, department regulations, and federal student loan documents all make clear that students can assert legal claims against schools as a defense to repayment of their loans.

In addition to addressing Corinthian loans, the letter also suggests that the Department clarify the grounds needed for students to discharge their student loans. The letter suggests the Department adopt a process that would recognize a defense to repayment for all affected students when an attorney general’s investigation finds a for-profit school in violation of state law.

For-profit higher education has become a big business. The U.S. Senate Health, Education, Labor and Pensions Committee reported that, during the 2009-2010 school year, for-profit colleges took in $32 billion in taxpayer-backed student aid and spent nearly 25 percent of their revenue on marketing and recruiting, exceeding what was spent on student instruction.

Enforcement actions against Corinthian allege the school misrepresented to current and prospective students:

  • the urgency of enrollment to secure a spot in a program;
  • the school’s historical success placing students in jobs in the students’ field of study;
  • the earnings of graduates;
  • the availability of advertised programs;
  • the employment assistance the school provides graduates;
  • the school’s role in its private loan program;
  • the nature, character, and quality of educational programs;
  • the school’s purported affiliation with the United States Armed Forces;
  • the transferability of credits;
  • the availability of externships; and
  • the nature and availability of financial aid.

Forty million Americans have an outstanding student loan, up from 29 million in 2008. Borrowers carry an average balance of $29,000 in student loan debt.

Nationwide, student loan debt now stands at $1.2 trillion, representing an increase of more than 150 percent since 2005. The scale of this investment demands that the Department and states work cooperatively to counter fraud and abuse within our higher education funding system.

In addition to Washington, other states that signed on to the letter include California, Connecticut, Illinois, Kentucky, Massachusetts, New Mexico, New York and Oregon.

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The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Attorney General Bob Ferguson is working hard to protect consumers and seniors against fraud, keep our communities safe, protect our environment and stand up for our veterans. Visit www.atg.wa.gov to learn more.

Contact:

Deputy Communications Director Alison Dempsey-Hall