Thousands of students swindled by the for-profit Corinthian College corporation will have their student loans forgiven at a potential cost of some $3.2 billion to American taxpayers.
Some 3,000 students have already had their loans discharged, at a cost of $40 million, while another 9,000 await government approval, according to Yahoo! Finance.
When the for-profit Corinthian College abruptly closed its doors, it left thousands of students hanging in the lurch still responsible for massive student loans. Those students filed to have their loans forgiven under a “borrowers defense,” which entitles students to loan forgiveness if they were the victims of fraud.
Corinthian, which owns Heald and Everest colleges, closed 28 campuses affecting some 16,000 students in four states in April after an investigation by the Board of Education and $30 million in fines.
U.S. Undersecretary of Education Ted Mitchell told the L.A. Times the for-profit college made 947 job placement misstatements. Students were working for Taco Bell and Safeway while Corinthian reported them as employed in their field.
When you start adding up how much you owe on student loans pic.twitter.com/8zh6sNzsix— Kwadwo™ (@Hurry010) August 28, 2015
The Corinthian Fifteen first started the loan forgiveness movement when they refused to pay back their student loans citing their inability to get a job. They called themselves the first generation to be made poor by the business of education and challenged the government to forgive their loans.
For-profit colleges are coming under increased scrutiny following Corinthian’s demise and now the Obama administration is ordering DeVry University to support its job placement claims, according to U.S. News and World Report.
Tuition and fees at for-profit colleges can be astronomical reaching as high as $10,000 per semester in some cases, compared to the average $5,000 for public colleges.
Debt and deceit: Preying on those sinking under student loans http://t.co/jxRzsgmrpz— Forbes India Feeds (@ForbesIndia) August 27, 2015
The data about the student loan crisis in America isn’t good and some economists have predicted it will be the next financial bubble to pop. Crippling student loan debt is often blamed for keeping the next generation of Americans poor. Large monthly payments made it difficult for student loan borrowers to buy a house, a car, or generally have the same lifestyle their parents did.
America’s total student loan debt is currently around $1.1 trillion and the average loan balance increased 74 percent in the last 10 years, according to Data is Good.
If a trillion one dollar bills were stacked up they would reach the moon and back four times, according to a quote from astrophysicist Neil deGrasse Tyson.
[Photo by Brett Deering/Getty Images]