WASHINGTON – Amid mounting national pressure on the Obama administration to forgive billions of dollars of federal loans owed by former students of the now defunct Corinthian Colleges, the most powerful man on the education committee in the U.S. House, Rep. John Kline, R-Minn., has remained remarkably quiet until now.
Some federal lawmakers, state attorneys general and student advocates say that those who attended Corinthian Colleges should not have to repay loans after allegations by the Department of Education and Consumer Financial Protection Bureau that the company lied to students about job prospects and relied on unseemly recruitment practices. The collapse of Corinthian, which ceased U.S. operations in April, was among the biggest meltdowns nationally in the lucrative for-profit college industry.
Kline said in a statement that he supports loan forgiveness for former Corinthian students.
In Minnesota, state officials last year barred Corinthian from enrolling any new students in its Eagan-based Everest Institute. Corinthian’s student population had already dwindled to 300 by that time in Minnesota, with students attending both Everest and some out-of-state online schools operated by Corinthian. The company sold off dozens of its properties, including Everest, which was in Kline’s district.
“A lot of lives have been severely disrupted by this unfortunate situation and I support discharging the loans for those eligible students who were in the process of earning a degree,” Kline said in a statement released after declining interview requests. “The department is continuing to review this and will determine any additional steps that may be taken. As I have stressed from the beginning, all parties should continue to keep in mind the best interest of students.”
Kline’s political opponents are hoping to make an issue of the growing controversy over the way some for-profit colleges operate. Angie Craig, who is running for DFL endorsement in Kline’s Second Congressional District, said she thinks for-profit colleges are taking advantage of students.
“These students … they are looking for a better life,” Craig said. “And for the life of me, I don’t understand why he [Kline] continues to support the for-profit college industry. He’s supposed to be a national leader in education and in my opinion, he’s failed Minnesota.”
As chairman of the House Education and Workforce Committee, a significant number of Kline’s donors come from education-related industries. According to the Center for Responsive Politics, the for-profit college industry has contributed $389,958 to Kline over the past two campaign cycles, making him the No. 1 recipient of for-profit college contributions in the House. Corinthian’s political action committee and its executives have donated $30,500 to Kline or PAC since 2010.
Corinthian even continued donating to Kline after it got in trouble with the feds. Public records show the last donation of $2,500 was made about six weeks after the U.S. Department of Education fined Corinthian $30 million for falsifying its job placement rates last year.
Craig called the PAC money from Corinthian “disturbing to me. It’s not like it’s one step removed from this industry.”
A couple of years ago, Corinthian’s reach spanned 100 campuses nationwide, with a total enrollment of 74,000. Valued at $1.5 billion, the California-based company drew much of its revenue from the federal government, through student loans. Schools offered two- and four-year degrees and certificates in everything from medical assistance to accounting.
Federal records show about 700 students were enrolled at the Eagan campus for the 2012-13 school year. Hundreds of other Minnesotans were enrolled in Corinthian-run online schools, including Everest College Phoenix, according to the Minnesota Office of Higher Education. In Eagan, the Everest school offered dental assistance, massage therapy and medical coding training diplomas.
Legal actions started popping up against the company about 2004, but initial complaints were dismissed.
By 2010, mounting complaints were building among Corinthian students to state investigators that the school was failing to live up to promises made when they enrolled.
Students said they were misled about job placement rates and as tuitions rose, many said they were pushed into high interest loans offered by the school to cover costs unmet by traditional federally backed loans.
Jerriesha Floyd saw her decision to attend the Everest Institute as a life investment.
The Maple Grove single mother of two, now 31, went to Everest to boost her income and fulfill her lifelong dream of becoming a nurse. In 2009 she took out a $15,000 federally backed loan for eight months of school and completed the course. But when she went to take the state licensure exam, she realized she didn’t know most of the answers.
“I ended up not taking it because I wasn’t ready for it,” Floyd said. “I didn’t feel like I got the proper education to take it.”
Though job placement help was promised, Floyd never got a job in the field.
She works for a medical supply company now and is considering joining a “debt strike” against Corinthian.
“There was a lot of misleading information with them,” she said. “I so regret attending the school. It’s embarrassing to tell anyone you went to that institute because people say, ‘Oh you’re stupid for going there.’ ”
In 2013 and 2014, state attorneys general in Minnesota and 14 other states launched state-based probes into Corinthian’s operations. In 2014 the $30 million federal fine came down from the Education Department. Soon after, federal officials imposed a 21-day delay on the disbursement of federal aid funds to the company.
That sparked a financial crisis at Corinthian, which agreed with the Obama administration to begin a “transitional operating plan” in exchange for a $16 million emergency infusion of cash that would allow it to continue classes for its students.
Student and legal advocates, including Minnesota’s Attorney General Lori Swanson, have sharply criticized the Obama administration for not being more transparent about what students should do with both their devalued degrees and their mounting debt.
“We don’t want to see these students revictimized,” said Swanson, who in May signed onto a letter with a dozen other state attorneys general asking federal education officials to furnish better options for former Corinthian students.
U.S. Sen. Al Franken, D-Minn., and Rep. Keith Ellison, D-Minn., are among a group of other lawmakers urging debt relief for former Corinthian students.
Federal officials estimate that the cost to taxpayers of wiping out Corinthian loan balances for students who attended in the past five years would top $3.2 billion.
On Friday, the Department of Education seemed to signal relief may come soon.
“Our administration is committed to making sure students who have been defrauded or whose schools closed receive every penny of debt relief that they are entitled to,” said Education spokeswoman Denise Horn. “While no final decisions have been made about how debt relief will work, we will make that as easy as possible for students and we will hold institutions accountable.”
Kline has spoken out before about the high cost of college, and in 2013 praised President Obama after he signed a student loan reform bill that sets federal student loan rates to financial markets. Kline also supports more transparency in what colleges cost.
Swanson, among others, wishes he would go further.
“Congress has to pass the reforms,” she said. “Congress needs to step up and regulate student loans.”