Student Loans Sold on Lies
More than 80,000 student loan debtors can now apply for loan forgiveness through the US Department of Education after the conclusion of an investigation into now defunct Corinthian Colleges this week.
The company once owned more than 100 for-profit colleges. It filed for bankruptcy in May in the wake of a probe into its practices. According to a Bloomberg report, the investigation found Corinthian systematically misrepresented the chances of landing a job with a degree from its schools in order to enroll new students. California Attorney General Kamala Harris said the company preyed on vulnerable groups:
Corinthian targeted ‘isolated, impatient people with low self-esteem and few people in their lives who care about them, and who are stuck and unable to see and plan well for their future,’ Harris said. That included ‘single mothers, veterans, and low-income individuals,’ she added. “
As Bloomberg put it, the promises made by Corinthian bore “little resemblance to reality.”
At Wyotech’s Long Beach campus, Corinthian told students there was a 100% employment rate for people getting an automotive technology diploma. The true job placement rate was 0%, the investigation found. At Everest University’s Brandon (Fla.) campus, students were told that more than 90% of people who got an associate’s degree in business or accounting received jobs. The actual job placement rate for both degrees was less than 15%, according to the investigation.”
Corinthian’s actions certainly warrant condemnation. But were the promises the company made really any different than those made by thousands of public and private universities across the United States in concert with the federal government?
Corinthian sucked people in through outright lies, but their tall tales really only differed in degree from the cultural lies peddled by government and the higher education establishment today. They tell you every single person deserves to go to college and will actually benefit by doing so.
That story bears little resemblance to reality.
Today, hundreds of thousands of students bury themselves under millions of dollars in debt in order to obtain a degree, only to find themselves working in jobs that high school grads dominated a decade ago.
As a result, they can’t pay back their loans.
Peter Schiff made this very point just a couple of months ago, emphasizing how the government has destroyed the value of a college degree.
Government wanted to make college more affordable. They made it more expensive. And at the same time, they destroyed the value of the degree. It costs more to get a degree, and the degree is worth less, because everyone now has one. If you actually want to differentiate yourself, you got to get a master’s degree. You got to get a PhD. A college degree means nothing. I think a college degree today has less marketable value than a high school diploma did before the government started subsidizing college. This whole bubble is going to burst…”
The government will now allow students scammed by Corinthian to seek loan forgiveness. Will it eventually let Americans scammed by university and government propaganda do the same?
In fact, a case now under consideration in the First Circuit Court of Appeals could pave the way for just that. If Robert Murphy wins, it will open the door to allow student loan debtors to discharge what they owe through bankruptcy. Current law excludes this option.
Consider the ramifications. The federal student loan bill currently stands at more than $1.3 trillion, and it’s increasing at a rate of about $2726.27 per second. Some 7.5 million student debtors are now severely behind in paying their student loan. If just a fraction of these people seek bankruptcy protection, we’re talking about billions of dollars.
And the US taxpayer is on the hook for all of it.
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