BLOOMBERG: A Test Case for Burned Student Borrowers

Career College Central Summary:

Brittany Jackl says she’s sent e-mails almost daily since March to federal agencies, state officials, and anyone else who might listen, decrying the “fraud and victimization” she and other students say they suffered at the hands of Corinthian Colleges, the for-profit company that filed for Chapter 11 protection in early May. The 31-year-old Floridian is finally getting some attention.
The U.S. Department of Justice trustee monitoring Corinthian’s bankruptcy has formed a special committee representing the interests of hundreds of thousands of Corinthian students in negotiations with the school and its unsecured creditors, a group that includes the Department of Education. Jackl is one of seven members. The students say Corinthian duped them into taking on federal loans, and they hope their newfound legal standing will give them leverage to push for debt relief, not only for themselves but for other Corinthian students. “This has taken over my life,” says Jackl, who has $72,000 in federal loans.
Troubles dogged Corinthian Colleges for years, with mounting allegations from state attorneys general and the Education Department that it falsified grades, attendance, and job-placement statistics in reports to regulators and in marketing materials.
The Santa Ana (Calif.) company, which has denied the allegations, in November agreed to sell about half its 107 campuses; on April 26, Corinthian said it would close its remaining locations, where about 16,000 students were enrolled. “Overall, our schools did a good job for the students they served,” Corinthian’s chief executive officer, Jack Massimino, said in a statement at the time. “We made every effort to address regulators’ concerns in good faith.” A week later, the company filed for bankruptcy.

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BLOOMBERG