Million Student March in Step With Federal Court Decision Against Corinthian
Can students sue a broke college for damages and expect to get compensation in cash?
The answer is probably no, even if the Department of Education is your daddy. But a court room win by former Corinthian College students could pave the way for alternative outcomes for dissatisfied students in the future.
Gary Feinerman, a U.S. District Court judge in Chicago ruled on October 27 that bankrupt Corinthian was on the hook for about $530 million in damages, winding up a suit filed by Consumer Financial Protection Bureau (CFPB), who represented former Corinthian students. The court found that among other things, Corinthian deceived students by misrepresenting the job prospects that graduates from the bogus chain of for-profit colleges could expect. Corinthian went bankrupt in May.
“We all have much more work to do before current and past students who were hurt by Corinthian’s illegal practices can be made whole,” said CFPB director, Richard Cordray, in a statement. “We remain deeply concerned about risks facing student borrowers in the for-profit space and will continue to be vigilant in rooting out harmful practices.”
According to the court order, the next step was for Corinthian Colleges to put money into a fund that would be distributed to former students. Whether or not the money exists is, at best, unclear. The closed Corinthian Colleges consisted of empty classrooms with no students. The notion that $530 will be available to compensate for students sounds fanciful indeed. But if the money originally existed in the form of student loans, it's unlikely that they will be repaid. The vast majority of Corinthian's revenue came from those loans, made by the Department of Education. If that's the outcome, the make-good for Corinthian students will probably come in the form of canceled student loans.
Higher ed may be concerned that the Corinthian case may open the door to for laws suits against other colleges--and not just for-profit colleges. It's grist for what may be a new era of student activism which is focused on the cost of college.
Cancellation of student debt was in sync with the demands rising from Thursday's Million Student March.
In addition to debt forgiveness, there were calls for tuition free public college and a $15 minimum wage for campus workers, a cause which has expanded and diversified the movement. While an accurate headcount may not come to one million, millions of messages went out on social media with hash tags like #millionstudentmarch and #fightfor$15. Demonstrations took place on over a hundred campuses from Boston to Berkeley.
Sounding very much like their father's student movement--if not their grandfather's--the manifesto on the group's website stated, "The United States is the richest country in the world, yet students have to take on crippling debt in order to get a college education. We need change, and change starts in the streets when the people demanded it."
Presidential hopefuls vying for the 2016 nomination have had to take notice.
Dark horse Democratic Senator Bernie Sanders from Vermont wants free tuition at public universities and colleges and pledged to cut interest rates on student loans. Rates for federal loans are tied to the 10-year U.S. Treasury note and as rates rise and fall, so do rates on Federal student loans.
Presumed front-runner Hillary Clinton has said she would increase access to tuition grants and let graduates refinance loans at lower interest rates. Student loan refinance bills introduced by Senator Elizabeth Warren (D-Mass.) have been shot down in the Senate.
Senator Marco Rubio (R-Fla.) said he would go with an income-based repayment system for federal student loans and would streamline applications for Federal aid. Republican candidates generally are opposed to any kind of loan forgiveness.