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Feds Found Widespread Fraud at Corinthian Colleges. Why Are Students Still Paying the Price?

Nearly 80,000 students of defunct for-profit giant Corinthian Colleges are facing some form of debt collection, even though the U.S. Department of Education unearthed enough evidence of fraud to forgive their student loans, according to an investigation by the staff of Sen. Elizabeth Warren (D-Mass.).

Before it shut down last year, Corinthian, which ran Everest Institute, Wyotech and Heald College, became an example of the worst practices in the for-profit education sector, including high loan defaults and dubious programs. Amid allegations of deceptive marketing and lying to the government about its graduation rates, Corinthian lost its access to federal funds in 2014, forcing the company to sell or close its schools.

On Thursday, Warren sent a letter urging Education Secretary John B. King Jr. to provide the immediate debt relief that Corinthian students are entitled to under federal law. The department has broad authority to cancel federal student loans when colleges violate students’ rights and state law, exactly what education officials accused Corinthian of doing. Yet the agency continues to collect on debt owed by tens of thousands of people eligible for forgiveness.