The implosion of Corinthian Colleges over the past 10 months was an unprecedented challenge for the U.S. Department of Education. But navigating the politics left in the wake of the company’s collapse may prove even trickier.
As Corinthian shut down its remaining campuses on Monday, the Education Department was again defending its role in dismantling the for-profit college chain and facing renewed pressure from congressional Democrats to relieve the federal loans of students who attended Corinthian.
The sudden closure of those campuses, which displaced approximately 16,000 students, could cost taxpayers as much as $214 million, according to a department official, who declined to be named. That figure represents the maximum possible hit to federal coffers if every student at the campuses shuttered Monday were to request a discharge of their federal loans based on Corinthian’s closure.
The actual amount of debt canceled is likely to be less, however, as students who continue their studies elsewhere would not be eligible for the closed-school discharge.
The department official said that the potential cost to the federal government of Corinthian’s closure could have been higher if it weren’t for the department’s "rapid and strong action to ensure an orderly wind-down of Corinthian’s business."
Had Corinthian collapsed last fall before the department brokered the sale of most of the company’s U.S. campuses to the ECMC Group, the official said, taxpayers would have faced a liability of $639 million in possible loan discharges.
Corinthian had more than 72,000 students last summer when the department-imposed restrictions on its access to federal aid caused a liquidity crisis at the company. Approximately 16,000 students had been enrolled this week, according to Corinthian.
"This is a consequence of the orderly wind-down," the department official said Monday.
Read more at Inside Higher Ed: https://www.insidehighered.com/news/2015/04/28/education-department-defends-corinthian-collapse-democrats-turn-pressure