Back in June, InsideHigherEd said that if all 350,000 students who attended the disgraced and now-shuttered Corinthian Colleges received debt relief for their federal education loans, it would cost taxpayers $3.5 billion.

So, the going is slow on that front for the 13,000 overwhelmingly lower-income students in California who fell victim to Orange County-based Corinthian’s predatory practices in a desperate attempt to get an education.

It’s not going much better at the state level. Last week, Governor Brown vetoed Assembly Bill 573, which would have helped students who attended nearly two dozen Heald College, Everest College and Wyoming Technical Institute (Wyotech) campuses.

The governor expressed sympathy in his veto message (pdf) and mentioned that he signed legislation that stopped the government from penalizing them “a second time with a significant tax bill on the value of the loan discharge, which they can ill afford to pay.”

AB 573 would have restored up to two years of Cal Grant and National Guard Education Assistance awards for students at Heald College who weren’t able to finish their educational programs and withdrew between July 1, 2014, and April 27, 2015.

Brown thought that sentiment “well-intentioned,” but he was “not comfortable creating new General Fund costs outside of the budget process.”

AB 573 would have provided $1.3 million to nonprofit community service organizations to help the students navigate the world of “federal and private loan discharge and other financial aid relief.” That would have included student access to legal, financial and academic counseling.

The legislation would have increased the Student Tuition Recovery Fund (STRF) from $25 million to $30 million. It was going to be $50 million in an earlier incarnation of the bill. STRF provides modest relief for some economic losses from school closures. But language was removed from the bill that would have explicitly “provided Heald College students eligibility to claim an economic loss under the STRF.”

Earlier language in the bill to provide California Community Colleges with $100,000 to facilitate the transfer of Corinthian students to their schools was removed before the final version won unanimous consent in both the Senate and Assembly.

State and federal authorities hammered Corinthian for nearly two years before the U.S. Department of Education finally put Corinthian out of business in April. California filed a lawsuit in October 2013, with allegations echoing charges in a scathing report (pdf) the year before on for-profit colleges by then-U.S. Senator Tom Harkin (D-Iowa).

Thirty operations were ripped for their high drop-out rates, questionable programs and targeting of non-traditional low-income students, including veterans, who piled up loads of debt and had nothing to show for it.  

Jennifer Abel at ConsumerAffairs back in August reported on how 11 state governments were begging the U.S. Education Department to improve the assistance to Corinthian students it announced in April which, upon review, fell short of expectations:

Instead of students just identifying themselves as Corinthian victims and getting relief:

“The DoE's plan required students to provide transcripts and other documents that are difficult if not impossible to acquire from an out-of-business school, and—as part of the ‘legal claims’ assertion—answer some rather sophisticated legal questions which non-attorneys are unlikely to know.”

The life lesson in this sort of behavior is probably not the education Corinthian students were hoping for.

–Ken Broder

To Learn More:

Governor Brown Vetoes Debt Relief Bill, Denying Aid to Thousands of Students Harmed in For-Profit College Closure (Public Advocates)

AB 573: Students Abandoned by Closure of Corinthian Colleges Turn to Legislature (Consumer Federation of California)

State Agency Struggling to Police For-Profit Colleges (by Steve Miller, CalWatchdog)

11 States Want Feds to Discharge Corinthian Students’ Federal Debt (by Jennifer Abel, Consumer Affairs)

Feds Suggest Stranded Corinthian Students Transfer to Other Suspect For-Profit Schools (by Ken Broder, AllGov California)