Corinthian Colleges and California Attorney General in For-Profit College Face Off

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Q&A: Should the Education Department discharge loans?

WASHINGTON (AP) — Students from the troubled Corinthian Colleges are getting support from state attorneys general and U.S. senators in their quest to have their federal student loans forgiven.

The question is what comes next. Discharging the debt of all former Corinthian students could cost the federal government billions. And any action to help them potentially opens the door for other former for-profit students — or other unhappy borrowers — to seek similar relief.

Corinthian, a for-profit educational institution, nearly failed last summer amid fraud allegations. It agreed to sell or close its campuses under pressure from the Education Department.

Thirteen U.S. senators led by Sen. Elizabeth Warren, D-Massachusetts, have asked the department to “put teeth into its existing legal authority” to forgive the debt. Nine state attorneys general added to the pressure in a Thursday letter that declared “Corinthian took advantage of students who were trying to build a better life for themselves and their families.”

Education Department officials say they are weighing their options. “These are tragic stories and I’m extraordinarily sympathetic and really want to do what is right and fair,” said Ted Mitchell, the Education Department undersecretary.

Some questions and actions about the “Corinthian 100” and forgiving student loan debt.



Corinthian was one of the country’s largest for-profit colleges, operating Everest College, HealdCollege and WyoTech, online and physical campuses. About 72,000 students attended.

The Education Department said Corinthian failed to provide adequate paperwork and comply with requests to address concerns about company’s practice, including allegations of falsifying job placement data in marketing and altering grades and attendance records. The schools also faced state attorneys general action in several states.

Students received $1.2 billion a year in federal loans in the final year the schools operated under Corinthian’s banner, court documents show. But because of the time it takes to pay off student loans, billions more of outstanding loans likely has built up. The department says it’s still calculating what it would cost to pay out claims.



They are a group of 100 current and former students who are refusing to pay back their student loans. Each has amassed tens of thousands — even $100,000 or more — in federal and private loans in areas of study such as nursing and criminal justice.

FILE - In this March 30, 2015 file photo, Makenzienbsp;hellip;

Organized by the Debt Collective group, they say the department has failed to help them, even as it took action against their colleges.



Historically, the department has erred on the “side of not forgiving anything,” says Ben Miller, a senior policy analyst at the New America Foundation and a former Education Department official.

Only under specific situations such as a school’s complete closure or forged loan documents is there a systematic way to seek relief.

But many Corinthian students likely won’t be eligible under the closure provision because the company is selling — not closing — many of its colleges under a deal worked out with the Education Department.

So, they’re using a little known provision in the Higher Education Act called “defense to repayment,” which says borrowers can fight collection efforts on federal student loans if their schools violated state law. Already, hundreds of former Corinthian students have submitted claims under this provision, using makeshift forms they’ve created.

The department says it hopes to address Corinthian borrowers’ concerns within the next month. Previously, only about five borrowers had ever sought to use this provision, according to the department.

The state attorneys general have asked the department either to waive all student loans incurred by Corinthian students during the period of its colleges’ alleged legal violations or set up rules to decide defense to repayment claims.

At least for the moment, students in states with attorney generals who have alleged Corinthian broke the law are likely in the strongest position.



Under Education Department rules, the company should be responsible for any cancelled debt — but Corinthian likely can’t pay. Its stock is all but worthless, and most of the company’s minimal assets have been transferred to a new manager who is shielded from liability.



Many are still accruing federal debt. The majority of Corinthian’s students are at schools now being run by a nonprofit called Zenith Education Group, which is in turn owned by a nonprofit educational debt collection company.

The fate of Corinthian’s schools in California is less clear; California attorney general Kamala Harris has refused to waive liability for Corinthian’s alleged illegal behavior. That makes them less likely to be transferred to new owners — and more likely to close.



If it were to forgive the debt of Corinthian students, it would be potentially opening a multi-billion dollar can of worms. Would all past Corinthian students be eligible? Or, just those in states where attorneys general take action? Should similar relief be extended to students enrolled at other colleges alleged to have engaged in similar violations of the law?

Discharging the debt would essentially be an acknowledgement by the department that it allowed Corinthian to take advantage of students for years.

Aside from flatly cancelling the debt, another option would be to ease repayment terms and potentially waive the debt if former students’ incomes can’t support it.

Absent any relief from the department, the next step could be lawsuits.


Follow Kimberly Hefling on Twitter: and Jeff Horwitz at .

StraighterLine Courses Approved by the Distance Education Accrediting Commission (DEAC)

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StraighterLine and the DEAC are working together to uphold principles of quality assurance and the utmost in academic standards for online college course delivery.

Baltimore, MD (PRWEB) April 13, 2015

StraighterLine, a leading provider of affordable, flexible and transferable online college courses, has completed a rigorous, nearly six-month review process with the Distance Education Accrediting Commission (DEAC). StraighterLine and the DEAC are pleased to announce that the DEAC’s Approved Quality Curriculum (AQC) committee has evaluated 17 StraighterLine courses and recommended AQC approval for them.

In granting AQC status for these courses, the DEAC has confirmed that the courses meet the academic quality standards the Accrediting Commission has established for distance education. Approved courses include

–English Composition I II

–College Algebra

–Introduction to Programming C++

–Accounting I II

–and other popular StraighterLine courses.

StraighterLine and the DEAC are working together to uphold principles of quality assurance and the utmost in academic standards for online college course delivery.

“StraighterLine is one of the most prominent names in online non-institutional higher education,” says Dr. Leah Matthews, DEAC Executive Director. “AQC recognition further distinguishes StraighterLine as a pioneer in academic innovations that offer real solutions to confronting the nation’s postsecondary achievement gap.”

Burck Smith, StraighterLine Founder and CEO, comments, “DEAC’s approval of StraighterLine’s courses further demonstrates StraighterLine’s commitment to delivering online general education college courses of the highest quality.”

Recognized by the U.S. Department of Education and the Council for Higher Education Accreditation

The DEAC is recognized by the Council for Higher Education Accreditation (CHEA) and the U.S. Department of Education as a reliable authority on quality assessment of distance education. Initially recognized by the Department of Education in 1959, the DEAC has continually held federal recognition, which aims to ensure that accreditors meet expectations for institutional and program participation in federal activities–including financial aid programs.

StraighterLine and DEAC: A Relationship that Benefits Students

The DEAC understands the importance of innovation when it comes to academic delivery and design. StraighterLine has positioned itself as just that–an innovator in the field of higher education. And by subjecting its courses to peer review and course accreditation standards, StraighterLine has strengthened its commitment to offering students the highest quality courses at the best value.

The DEAC is committed to experimenting with new ways of extending the educational reach of distance education by vetting the quality standards of online courses with the ultimate goal of supporting students who would not otherwise have access. This objective aligns perfectly with StraighterLine’s mission to provide a low-cost, self-paced avenue for students to conveniently earn their degrees on their own schedules.

About DEAC

Founded in 1926 with the moniker National Home Study Council, the Distance Education Accrediting Commission is recognized by the U.S. Secretary of Education and by the Council for Higher Education Accreditation (CHEA) as a national institutional accrediting organization for postsecondary distance education institutions that offer programs primarily by the distance education method from the non-degree level up to and including the professional doctoral degree.

DEAC’s goal is to ensure a high standard of educational quality in the distance education institutions it accredits by requiring compliance with its published standards, policies and procedures and by fostering continual self- improvement. DEAC is dedicated to ensuring a quality education for the more than 2 million students who annually study at its 102 accredited institutions.

About StraighterLine

StraighterLine helps students reach their full potential by putting them on a straighter line towards the degree of their choice, the career of their dreams, and the life they’ve always wanted – on their budget and on their schedule.

StraighterLine was founded in 2009 by Burck Smith as a solution to the rising costs of college education. Burck set out to discover why prices for online courses were the same or higher than those of face-to-face courses. Using relationships with colleges, publishers, and policymakers that were forged in his 15 years of online higher education experience, Burck created StraighterLine, a way for students to get low-priced – but high quality – college credit.

StraighterLine students have transferred over 26,000 StraighterLine credits to America’s colleges. In addition to our 80+ Partner Colleges, over 400 colleges have accepted credit for StraighterLine courses. In addition to the recent review and recommendation from DEAC, StraighterLine’s courses are also evaluated and recommended by the American Council on Education’s College Credit Recommendation Service (ACE CREDIT). More than 2,000 colleges and universities consider ACE CREDIT recommendations in determining the applicability of coursework and examination results to their courses and degree programs.

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Fitch Rates Alabama Public School and College Authority's $130MM Bonds 'AA+'; Outlook Stable


Fitch Ratings assigns an ‘AA+’ rating to the following bonds of the Alabama Public School and College Authority (the authority):

–$34.61 million Capital Improvement Pool Refunding Bonds, series 2015-A;

–$49.985 million Capital Improvement Pool Refunding Bonds, series 2015-B;

–$45.785 million Capital Improvement Pool Bonds, series 2015-C.

The bonds are expected to sell via negotiation on or about April 16, 2015.

The Rating Outlook is Stable.


The bonds are limited obligations payable from pledged revenues, including utility taxes and sales and use taxes. Each bond series is subordinate to prior issues; once issued, the 2015-A, B, and C bonds will occupy the 15th lien position respecting the pledged revenues.


PRIMARY STATE FUNCTION: Although not a general obligation (GO) pledge, pledged revenues include major state revenue sources, including the sales tax, and finance a major state responsibility – K-12 and higher education. As such, the bonds are rated on par with the state’s GO bonds. Financing of education is centralized at the state level.

STRONG DEBT SERVICE COVERAGE: Pledged revenues provide ample coverage of debt service requirements both on an annual and maximum annual basis.

SPENDING CONTROLS: Balanced financial operations reflect the statutory requirement to balance the budget with across-the-board appropriation reductions if revenues fall short; debt service is excluded from this requirement.

SLOW GROWTH IN ECONOMY: The trend in Alabama’s economy is toward more diversification although it retains a sizeable manufacturing base. There is an ongoing positive shift from low paying textile and apparel jobs to higher paying durable subsectors including automobile and aerospace manufacturing.


CHANGE IN STATE GO RATING: Although not specifically linked to the GO bond rating, a change in the overall credit environment in the state would likely lead to a change in the PSCA rating.

REDUCTION IN DEBT SERVICE COVERAGE: The rating is sensitive to changes in debt service coverage, either due to significant fluctuation in pledged revenues, excessive leveraging of the pledged revenues, or statutory changes that reduce pledged revenues.


The rating reflects ample coverage of debt service by pledged revenues, the strength of the pledged revenues, which include major state revenue sources, and the core nature of the activities being financed (K-12 and higher education) as well as the strong budget controls exhibited by the state and its overall strong credit quality.

The authority provides capital financing for public education in Alabama, and, with $2.2 billion of debt outstanding (as of Jan. 1, 2015), is the most active debt issuer of the several authorities that issue debt in the state. The authority members are the governor, the state superintendent of education, and the director of finance, indicating the importance of this financing mechanism and the role of the state in education.


The bonds are a limited obligation of the authority payable from pledged revenues, which include statewide sales, use, utility gross receipts and utility service use taxes. Pledged revenues not needed for debt service are deposited into the state Treasury to the credit of the Education Trust Fund (ETF), a special fund of the state that is the largest operating fund into which taxes and revenues are deposited. The ETF funds K-12 and higher education as well as smaller education, health, library and other programs. Each bond series has its own separate lien on pledged revenues subordinate to prior issues; once issued, the 2015-A, B, and C bonds will occupy a 15th lien position respecting the pledged revenues. Given the ample coverage of debt service by pledged revenues, discussed further below, the subordinate status is not a rating factor.

While the authority bonds are not general obligations of the state, the rating does reflect the state’s general credit quality as pledged revenues include major state revenue sources and finance a central state responsibility. Alabama has extensive earmarking of taxes and uses special obligations for nearly all of its capital needs. The general fund has a minor role in state operations and only a modest amount of debt issued against it. State general obligation bonds are rated ‘AA+’ by Fitch based on the state’s longer-term trend toward a more diversified economy despite a severe recessionary downturn in manufacturing, strong spending controls that contribute to balanced operations, and manageable debt levels.


Pledged revenues provide ample coverage of debt service requirements both on an annual and maximum annual basis. Fiscal year 2014 revenues of $2.2 billion provide 8.5x coverage of maximum annual debt service. Pledged revenue declined modestly (-3.6%) in fiscal 2013 as anticipated, reflecting modest growth in revenues offset by a new school voucher related tax credit associated with the Alabama Accountability Act. Revenues rebounded with relatively strong 4.6% growth in fiscal 2014.

The series 2015-A and B bonds are being issued to refund outstanding debt for present value savings. The 2015-C bonds will finance loans to local school boards for capital projects under a pooled approach that allows capital funds of the state to be leveraged rather than being limited to support pay as you go financing. The authority also issues capital outlay bonds for capital improvements to public schools and institutions of higher education with proceeds considered grants to recipients. Overall debt levels in the state are at the low end of the moderate range, with tax supported debt equal to 2.2% of 2013 personal income.


State financial operations, including the ETF, benefit from strong spending controls, with a constitutional requirement to make across-the-board appropriation reductions, called ‘proration,’ when a deficit is projected in one of several funds. Debt service is not subject to proration. This device has been implemented several times, particularly through the most recent recession. The state generated a sizeable surplus in the ETF in fiscal 2013, allowing it to make a $330 million repayment to the rainy day fund at the end of the year. It is on schedule to repay the draw on the rainy day fund by the end of fiscal 2015.

In an attempt to minimize the unpredictability of mid-year reductions in education funding, in 2011, the state enacted legislation to create a new budget stabilization fund for education that will be used to offset future proration. The legislation limits future education appropriations to the 15-year rolling average of ETF revenues and deposits any excess revenues into a new ETF budget stabilization fund, after first repaying the fiscal 2009 draw on the rainy day fund.


Alabama’s economy was historically dominated by agriculture, natural resource extraction, and manufacturing, including textiles and iron and steel production. Today, the state still depends more heavily on manufacturing relative to the national average, but manufacturing has shifted away from textiles and apparel, particularly to the automotive sector. This sector was hard hit in the recent recession, but the foreign-owned automakers in the state, including Honda, Hyundai, and Daimler AG, continue to invest and produce in Alabama.

Alabama’s labor market has been slow to emerge from the recession and has lagged the nation since in job creation. As of February, non-farm employment had reached just 96.5% of its pre-recession peak, below the U.S. median of 102% and one of the weakest of the states. Most recently, non-farm employment grew 2% in February 2015, while employment nationally grew 2.3%. The unemployment rate, which is typically lower than the U.S. rate, remains slightly above the national rate at 5.8%.

For further information on Alabama’s GO rating, please see Fitch’s press release from July 22, 2014, ‘Fitch Rates Alabama GOS ‘AA+’; Outlook Stable’, available at ‘‘.

Additional information is available at ‘‘.

In addition to the sources of information identified in Fitch’s Tax-Supported Rating Criteria, this action was additionally informed by information from IHS Global Insight.

Applicable Criteria and Related Research:

–‘Tax-Supported Rating Criteria’ (Aug. 14, 2012);

–‘U.S. State Government Tax-Supported Rating Criteria’ (Aug. 14, 2012).

Applicable Criteria and Related Research:

Tax-Supported Rating Criteria

U.S. State Government Tax-Supported Rating Criteria

Additional Disclosure

Solicitation Status


Education Overseers: Spending sheds light on ed board’s priorities

PORTLAND, Ore. – The overarching education board charged with streamlining and unifying the state’s education system and strategically targeting funds to student outcomes has attempted to do so through at least three major initiatives, a review of public records and interviews found.

The Oregon Education Investment Board has spent hundreds of thousands of General Fund dollars on consultants to analyze and summarize data relating to educational outcomes, develop a statewide literacy campaign and, most significantly, foster partnerships within communities around the state.

The OEIB calls those partnerships, Regional Achievement Collaboratives, or RACs.

View the money breakdown of the RACs and find out about yours

There are 13 in the state and they encompass, in most cases, more than one county. There are RACs that exist in the Columbia River Gorge, eastern Oregon, the coast, the Willamette Valley, central Oregon, southern Oregon and southeast Oregon. In short: almost everywhere.

They have innovative-sounding names like The All Hands Raised Partnership, Career and College Ready, Connected Lane County, the Klamath Promise Initiative and Poverty to Prosperity.

“The goal of the RACs as an OEIB strategy is to build off regional assets, needs, and expertise to find solutions to tackle locally defined issues related to student outcomes,” said OEIB’s spokeswoman, Kristin Gimbel, in emailed remarks.

But beyond the OEIB’s mission statements and educational jargon, its goal with the RACs boils down to providing support and incentivizing, with money, community partners to collaborate on the regional level to improve education.

“The only way you can move anything P-20 is to have everybody in a region tied to P-20 working together on common goals,” said Mark Mulvihill, an OEIB board member and superintendent of InterMountain Educational Service District in Pendleton, which received $50,000 from OEIB. “So the idea is – let’s create these RACs – let’s see what’s going on out there – let’s invest a little bit of coin to incentivize to get this going and see who wants to play together.”

The amount of “coin” the OEIB has invested in the RACs or related activities since July 2013 is a little more than $400,000, according to Department of Administrative Services records obtained through a public records request and follow-up interviews with each of the entities that received money.

View the list of OEIB expenditures (Excel)

The OEIB also seeks to get many entities in a community that go “beyond the classroom” involved. These entities include businesses and nonprofits that support the region’s educational goals.

The OEIB was the brainchild of former Gov. John Kitzhaber. The Legislature signed off on it in 2011. There are 13 members on the board, including the governor, who chairs it. It has 16 staff members, most of them well paid.

At first, OEIB was funded out of the governor’s office. In 2013, it became its own agency, and the Legislature approved a $6,035,608 budget for the years 2013-15. In 2014, lawmakers transferred funds from the Engineering and Technology Industry Council to the OEIB, increasing its budget to $21,008,299. The OEIB was given responsibility to invest the money in engineering education.

The whole thing is run by the chief education officer. Rudy Crew was the first. He lasted just short of a year. Nancy Golden, a former Springfield school district superintendent, is currently at the helm. Even OEIB critics praise her for being inspirational and collaborative.

The OEIB is up for review this year. The Legislature will decide if it continues or if it is modified in some way. A plan is afoot in the halls of the Capitol to dissolve the board in its current form and replace it with an advisory council. The Senate Education Committee will hold a work session on SB 215 on Friday, April 17 to consider amendments to the bill and the future of the OEIB.

Critics say the board only listens to a narrow field of experts, lacks transparency and drains away money from an underfunded education system.

Said Chuck Bennett, director of government relations at the Confederation of Oregon School Administrators, during a February public hearing on SB 215: “Some of the ways it has used school classroom funds to pay for grant-related and directed dollars for programs that are presumably scalable, but never scaled. … They don’t seem to come into the system in a meaningful way.”

Gimbel said it’s not the OEIB’s intention to scale programs statewide.

“Given the unique challenges and opportunities in each community, the intent is not to scale a one-sized fits all approach across the state, but to honor the unique regional assets and opportunities and foster RAC learning networks to share effective practices and collective impact strategies,” she said.

As for the RACs themselves, they have used the money from the OEIB for a variety of purposes, including starting pilot programs in their region, hiring staff or RAC coordinators and for consulting.

Almost all the RACs were contacted for comment or information for this story. A common theme from those that responded or commented, which was most of them, was that the OEIB had helped them network with other regions in the state and provided support for developing their RACs.

OEIB has “helped Better Together Oregon build organizational capacity and grow the statewide recognition of our work,” said Anna Higgins, coordinator for Central Oregon Better Together, a RAC that encompasses Jefferson, Crook and Deschutes counties. “We feel a genuine partnership with OEIB and other RACs.”
“The ‘bully pulpit’ function of the OEIB has also been very helpful in getting local education partners and others (to) understand the critical value of community collaboration,” said Scott Perry with Southern Oregon Success that spans Josephine and Jackson counties.

“We have had a couple of different summits where representatives from all the RACs come together, so we’ve gotten to know each other and hear each other’s stories and develop ways of communicating … so that we can ask questions of one another or gain ideas from one another,” said Gwen Soderberg-Chase, the RAC coordinator for Douglas County Partners for Student Success. “The issue for us in rural areas is we don’t have those natural points of opportunity for communication and crossing paths as one might in more of the metro area.”

The RAC representatives said their efforts existed in some form before the OEIB. And they said that even if the OEIB ended, their efforts would continue – but diminished.

“We would lose our staffing, which has been critical in providing an opportunity to hire a neutral, third-party leader who can bring together local schools, business leaders, community members and the community college,” said Abby Lee with Poverty to Prosperity, a RAC that encompasses counties Grant, Harney, Malheur and part of Baker in southeastern Oregon.

“We would feel a significant hit from the loss of financial and in kind resources afforded to Better Together Central Oregon,” said Higgins. “We need their continued support to maintain our momentum.”

The RACs have also received funding from other sources, including various foundations and grants from the Oregon Department of Education.

Mulvihill, the OEIB board member and superintendent of the InterMountain Education Service District, said he thinks the OEIB won’t survive.

“But what I do hope survives is Nancy Golden and her way of convening, bringing stakeholders together, and the ability to incentivize and put a few dollars into strategic spots on the continuum,” he said.

What about those two other initiatives?

According to Gimbel, the OEIB’s spokeswoman, the agency contracted with ECONorthwest to analyze data for “equity-focused summits” around the state to highlight best practices in building student reading skills. ECONorthwest also developed fact sheets for 11 regions around the state for education-related outcomes that included “kindergarten readiness, third grade reading, five-year graduation rate, and college enrollment rates.” And it looked at things like “socio-economic, health and infrastructure measures that are likely to explain or predict education outcomes.”

The OEIB paid ECONorthwest $14,712.50.

The OEIB also hired Metropolitan Group of Portland at a cost of $73,417.65 for “consulting and creative design services” for stORytime, a campaign to help children learn to read proficiently by the time they’re third graders.

“It showcases easy ways families can help their children build literacy skills every day, everywhere through play, talk, reading and singing,” said Gimbel.

According to state records, the single entity on which OEIB spent the most money was to rent office space from First Presbyterian Church, a short walk from the Capitol. Since July 2013, OEIB has leased the church’s Somerville Building for a total of $154,320.63. Its contract with the church expires June 30 and Gimbel said the OEIB is currently negotiating a lease extension through March 15, 2016, which incidentally, is the same day the OEIB will die if lawmakers don’t extend its life.

Read OEIB spokeswoman Kristin Gimbel’s emailed responses to KATU.

Learn more about the Regional Achievement Collaborative in your region:


Columbia Gorge Community College

Columbia Gorge Regional Center of Innovation


Klamath Falls City Schools

The Klamath Promise Initiative


Lane County Education Service District

Connected Lane County


Chemeketa Community College

Willamette Promise


Tillamook County School District 9

Career and College Ready


Southern Oregon Education Service District

Southern Oregon Success


Umpqua Community College

Douglas County Partners for Student Success


Portland Public Schools

The All Hands Raised Partnership


Oregon State University

Valley-Coast Partners for Student Success


Malheur Education Service District 14

Poverty to Prosperity


InterMountain Service District

Eastern Oregon Collaborative


High Desert Education Service District

Central Oregon Better Together

South Coast Connect for Success

Portland State University

Regional Achievement Collaborative state kickoff summit


 Sources: DAS and individual recipients.

College offers young offenders hope

A new college for young offenders in Northern Ireland offers them the chance of a more positive future, the Justice Minister has said.

David Ford hailed the opening of the new facility inside Hydebank Wood Young Offenders’ Centre in South Belfast.

Justice Minister David Ford hailed the launch of a new college for young offenders

The college, for young men aged 18 to 21, aims to address offending behaviour through education, vocational training, mentoring and support programmes.

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Prisoners will be involved in a range of activities from Monday to Friday with a number of weekend classes also provided.

“The opening of the new Hydebank Wood College is an important milestone for prison reform in Northern Ireland,” said Mr Ford.

“In 2013, more than a third of young people committed to Hydebank Wood had literacy problems and over half had numeracy difficulties. Through education and skills training the college will give more young people hope for the future and at the same time help to deliver a safer community in Northern Ireland.

“This unique college environment will support, stretch and challenge young adults, and help them to develop their skills and employability, address their offending behaviour so they can make a positive contribution to their community after release.”

The development of a college at Hydebank Wood was among recommendations in a major review of the Prison Service.

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It will operate as a campus with structured timetabling and free flow movement.

Mr Ford said, when appropriate, offenders will also be considered for risk-assessed external work placements to further support their community reintegration.

Prison Service director-general Sue McAllister said: “This is a huge step forward for our entire Prison Service. Addressing offending by young people requires a different approach and the new college will provide that.

“Its emphasis will be on building numeracy and literacy skills and delivering recognised qualifications.

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“Finding meaningful employment after release is critically important for rehabilitation and the college can play a huge role in that.

“Finally, I would like to thank the governor, Austin Treacy, and everyone at Hydebank Wood for delivering the college.”

Copyright (c) Press Association Ltd. 2015, All Rights Reserved.

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9 states side with Corinthian College 'debt strikers'

Five student debt pitfalls

Nine states have sided with 100 former students who refuse to pay off loans they used to attend a for-profit college they say ripped them off.

The states’ attorneys general are urging the government to forgive federal loans that these students and thousands of others borrowed to attend Corinthian College. They say the college preyed on low-income people with high-interest loans and misrepresented its job placement rate and what graduates earn.

The now defunct network of colleges is in a mess of trouble for its tactics and is facing lawsuits brought by the Consumer Financial Protection Bureau and attorneys general in California, Massachusetts and Wisconsin.

“Corinthian took advantage of students who were trying to build a better life for themselves and their families” said Massachusetts Attorney General Maura Healey.

At one point, Corinthian owned about 100 campuses across the country, with nearly 90,000 students. The “debt-strikers” started as a group of 15 former students refusing to pay their loans. In a month, the group has grown to more than 100.

corinthian 100
Some of the 100 debt strikers met with the Deptartment of Education last month.

Tuition and fees for some of its programs cost more than five times those at other public colleges, according to the CFPB. A bachelor’s degree cost up to $75,000 and an associate’s was as much as $43,000.

Corinthian was so expensive that many students needed to take out both federal loans and private loans to cover the cost. The college offered its own private loans, which came with interest rates sometimes twice as high as federal loans.

Related: 100 Corinthian students refuse to pay their loans

Former and current students who took out those private loans are already getting some relief. Earlier this year, the government struck a deal with the company acquiring some of Corinthian’s campuses, forcing it to wipe out $480 million in debt. Ongoing lawsuits could increase that amount.

But Corinthian students are still on the hook for their federal loans, and that’s what the attorneys general want the government to forgive.

They say the school “relentlessly pursued potential students,” including veterans, single parents, and first generation college students by misrepresenting job placement numbers, what graduates earn, and the school’s role in its private loan program.

What $100,000 in student debt feels like

Its marketing strategy was geared to prospective students who were “isolated,” had “low self-esteem” and “few people in their lives that cared about them,” according to a letter the attorneys general sent the Department of Education on Thursday.

The agency has yet to respond to the letter, but said it “shares the attorneys general’s concern for the welfare of Corinthian students,” said spokeswoman Denise Horn.

The Department of Education has the power to cancel any student’s federal loans, and can do so for students who meet certain criteria and apply for relief.

One of those criteria is if a student’s school closes. (About half of the Corinthian schools have done so.) The attorneys general are also asking the agency to clarify the grounds for debt cancellation.

Related: If I marry you, do I marry your student loans too?

U.S. asked to forgive debt of Corinthian Colleges students

California Atty. Gen. Kamala D. Harris is calling on the federal government to forgive student loan debt for thousands of students who enrolled at schools run by Santa Ana-based Corinthian Colleges Inc.

Ex-student of Corinthian Colleges took protest over $130,000 debt to D.C.

Harris and eight other attorneys general, including Illinois Attorney General Lisa Madigan, sent a letter Thursday to U.S. Education Secretary Arne Duncan, asking that the government relieve students of debt incurred “as a result of violations of state law” by the scandal-plagued for-profit college chain.

Debt carried by hundreds of thousands of primarily low-income students has been one of the biggest unresolved issues surrounding the near-collapse of Corinthian, which has been in the process of selling off and closing down schools after a crackdown by the U.S. Department of Education last summer.

The attorneys general are asking the Education Department to use a little-known federal regulation that allows students to avoid repaying loan debts for schools that broke state law by deceiving students.

lRelated Corinthian students to get $480 million relief from 'predatory' loans
HomeCorinthian students to get $480 million relief from ‘predatory’ loansSee all related

“These cases against Corinthian have unmasked a school that relentlessly pursued potential students,” the letter read, “promising jobs and high earnings, and preying on their hopes in an effort to secure federal funds.”

Corinthian, once one of the nation’s largest for-profit college operators, has been in the cross hairs of federal and state investigators for years over allegations that its schools roped students into unmanageable debt with promises of career training.

The company was crippled by an Education Department move to restrict its access to federal student aid amid concerns that schools were falsifying student job placement rates.

A revolt is growing as more people refuse to pay back student loans

A revolt is growing as more people refuse to pay back student loans Danielle Douglas-Gabriel Remember those 15 people who refused to repay their federal student loans? Their “debt strike” has picked up 85 more disgruntled borrowers willing to jeopardize their financial future to pressure the government into forgiving their student loans. Remember those 15 people who refused to repay their federal student loans? Their “debt strike” has picked up 85 more disgruntled borrowers willing to jeopardize their financial future to pressure the government into forgiving their student loans. ( Danielle Douglas-Gabriel ) –>

The broad request for federal loan relief by the state attorneys general would mark an unprecedented action by the Education Department. Typically federal loans are discharged only when schools suddenly close or if a borrower dies.

“We’re on new ground here,” said Ben Miller, a former policy advisor at the Education Department who now works at the nonprofit New America Foundation in Washington.

The Education Department crafted a plan last summer that allowed Corinthian to sell off or gradually wind down operations at its schools. The company agreed in November to sell off the vast majority of its schools to ECMC Group, a nonprofit student loan servicer.

Because the schools stayed open, only a small fraction of borrowers were eligible for refunds.

The U.S. Consumer Financial Protection Bureau sued Corinthian last fall, and the company is under investigation by more than a dozen state attorneys general.

Though many of those cases are still pending, the attorneys general wrote that “it is within the [Education] Department’s existing legal authority to help students who have been harmed by these schools.”

A spokeswoman for the Education Department, Denise Horn, said in a statement that the agency shares the concern for the welfare of Corinthian students. “We look forward to responding to their letter,” she said.

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Obama calls for more rights for struggling student borrowers President Obama urged student borrowers Tuesday to stand up for their rights, and announced a medley of modest steps to bring some order to a notoriously chaotic system. President Obama urged student borrowers Tuesday to stand up for their rights, and announced a medley of modest steps to bring some order to a notoriously chaotic system.Read the story –>

A spokesman for Corinthian, Joe Hixson, pointed out that the cases referenced by the attorneys general are still ongoing.

“There continues to be a due process issue here,” he said. “Everything now is just allegations; nothing’s been proven.”

The Consumer Financial Protection Bureau announced a deal in February that offered students forgiveness for private loans — those not backed by the federal government — taken out at Corinthian schools. But federal loans make up the vast majority of student debt.

Corinthian and other for-profit schools rely heavily on federal student loans and grants for revenue. According to the company’s most recent annual report, from 2013, the company received nearly 85% of its revenue — about $1.3 billion — from federal student aid.

The attorneys general’s request comes as a group of more than 100 former Corinthian students have gone on a “debt strike” — refusing to pay off debts from Corinthian. The group met with officials at the Education Department and the Consumer Financial Protection Bureau in Washington last week.

One former student, Nathan Hornes of Los Angeles, said he has more than $68,000 in debt and said his bachelor’s degree from Everest College-Ontario hasn’t helped him get anything more than jobs in fast food.

“I don’t even tell people that I have a degree, because it’s like I technically don’t,” he said.

Hornes and others want the Department of Education to act: “We’re tired of telling our stories. They know what they need to do.”

Copyright © 2015, Chicago Tribune

Attorneys general say Corinthian Colleges students' debts should be erased

Attorneys general in nine states, including California’s Kamala Harris, are joining a push to erase debts owed by students of troubled giant Corinthian Colleges.

In a letter sent Thursday to U.S. Department of Education Secretary Arne Duncan, the attorneys general argue that the Santa-Ana based for-profit college has engaged in predatory business practices and its students should have their $1 billion-plus federal student loan obligations forgiven under existing regulations.

The Education Department may discharge student loan debt where schools “broke state law by deceiving students and failing to provide promised education or services,” the letter says.

Harris and attorneys general in Massachusetts and Wisconsin are suing Corinthian over charges that the company misled students with inflated job placement statistics and targeted vulnerable populations with high-cost loans.

“These students deserve relief,” says the letter to Duncan, obtained by the Register. “While various enforcers are pursuing Corinthian, these actions will not be enough to provide prompt help to Corinthian’s victims.”

The letter follows similar requests by 13 U.S. senators in December and a group of former Corinthian students who call themselves the “Corinthian 15.” The students are refusing to pay their federal student loans as part of a “debt strike,” arguing they are victims of fraud.

More than 100 Corinthian students are now participating in the strike, according to organizers.

Corinthian’s financial and legal challenges are immense. While gradually selling or closing all of its campuses under an agreement with the Department of Education, it faces additional pressure from more than a dozen lawsuits and investigations across the nation.

Corinthian disputes allegations that it misled students. It acknowledges only isolated incidents of employee misconduct and has argued in court documents that attorneys general are unfairly targeting it over “deceptively excerpted and – at best – misunderstood materials.”

Corinthian has operated campuses under the Everest, WyoTech and Heald brands. In June, education officials said the company had received about $1.4 billion in annual federal financial aid for students.

However the dust settles, the attorneys general said in their letter that Corinthian’s liabilities would likely limit how much of the school’s money could be available for student loan debts in the event that courts rule in favor of the states.

“The surest and most expedient way to help students is to have the (U.S. Education) Department relieve borrowers of their obligation to repay” their federal student loans, they said.

Several recent news reports put the total federal loans owed by Corinthian students at $1.5 billion. Corinthian estimated in a court filing last year that students owed more than $1.2 billion.

Many Corinthian students also took out high-cost private loans to pay for their schooling. In February, borrowers of these loans received some relief through a $480 million deal secured by federal consumer protection officials. About 40 percent of eligible outstanding debt was immediately forgiven.

Aside from a blanket cancellation of Corinthian-related debts, the attorneys general also urged Duncan to make it easier for students from any school to obtain loan forgiveness. Their letter says it’s unclear what legal grounds and processes must be followed.

Asked to comment on the letter, the Education Department emailed a one-sentence statement from spokeswoman Denise Horn: “The Department shares the attorneys general’s concern for the welfare of Corinthian students and we look forward to responding to their letter.”

Corinthian spokesman Joe Hixson questioned whether the conclusions of state investigators rise to the level of legal scrutiny required to discharge federal student loan debts.

“It is important to note the difference between findings and allegations – a number of state (attorneys general) have made allegations but as these cases are still in progress, it would be inappropriate to presume guilt without due process,” he said.

The Corinthian 15 student group met with federal consumer protection, education and Treasury officials in Washington two weeks ago to discuss their requests. Organizer Ann Larson said Thursday that the group has not yet heard back from the officials.

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Who pays for college? Many teens may be in for a surprise

Parents aren’t talking to their kids about the cost of getting a college education, and that could spell big trouble.

According to a new survey by the financial literacy prep course Junior Achievement, there is an enormous expectations gap between parents and teens when it comes to who will be paying for college. Nearly half of all high school students expect that their parents will pay their tuition.

Only 16% of those parents agree.

The result is a sort of slow-rolling disaster, with high school students often ignorant and unprepared for the financial realities waiting for them on the other side of graduation. Families could deal with this up front, recommended Junior Achievement President Jack Kosakowski, except that it touches on a taboo subject. Parents, in his experience, would rather talk to their kids about sex than money.

“The theme of this is with parents and their kids there’s really a disconnect,” Kosakowski said. “Kids and parents simply aren’t talking about funding their college education. To me that’s really troubling.”

He called the tuition disconnect part of a bigger challenge, that families avoid teaching children about money and budgeting in general. Indeed, in many families, the parents themselves may need a refresher on the subject. Without proper education they have often made embarrassing mistakes, and are reluctant to share those experiences with their children.

© Comstock/Getty Images
Mother and daughter talking seriously.

Now, there is some good news. Junior Achievement’s survey studied the expectations gap between parents and children about full freight tuition, meaning that many more parents may have plans to make some contribution to their child’s education. The problem is that this information often comes too late. When money has become an awkward subject parents might hesitate to raise the issue until the last minute, when the family has gathered to celebrate a stack of acceptance letters… and then break the bad news.

It’s a problem that plays out every spring in the office of Jim Brooks, the University of Oregon director of financial aid and scholarships. It’s a particularly heartbreaking scenario: students fall in love with their school of choice, he explained. To learn that they can’t attend because of money is painful, especially after the thrill of acceptance and planning a college career along with all their friends.

Those students are nothing, however, compared to the students who have to leave school mid-year because the talk comes after enrollment.

“You have the parents that refuse to say to their son or daughter, ‘we can’t afford to send you there,’” Brooks said, “and after a term or two they realize that this isn’t going to work out. By then their son or daughter has gotten attached to the school and they have to pull them out, because they can’t afford to keep them there.”

For parents, the problem is often preparation. Some families haven’t saved or started saving too late, and they can’t afford college tuition on what they have available. These parents may often avoid talking to their children out of reluctance to admit that mistake, pushing off the issue until they can’t avoid it any longer.

For other families the reality of college costs come as a surprise. “I’ve had conversations with parents and students who were totally surprised,” Brooks said, not because they didn’t know the numbers but because they had convinced themselves that it would all somehow work out.

He tells the story of one family that had to rebuild its college plans, because the parents believed that their son would get scholarship money. Only one school offered him anything, awarding $5,000 to attend a $60,000 school. It was nowhere even close to enough.

Some families try to negotiate, convinced by friends and financial counselors that colleges will bargain over their prices. Public schools don’t have the luxury of negotiation, Brooks said.

Private schools rarely want to.

Students can sometimes get help. The ones who need to close a relatively small gap can apply for financial aid or take out loans, while others who simply need money to make the rent can find a campus job.

Those cases are the good ones. The difficult conversations, Brooks said, are students who come in looking to cover most of their tuition. For them the math often just doesn’t work. The day is long past when a student working the average 10 to 15 hours per week can make even a meaningful contribution to a college tuition, and student loans can only help so much.

Federal loans for an undergraduate max out at $5,500 per year. “If they’re a non-resident student looking at a school out of state, that’s just a drop in the bucket,” Brooks said.

It’s why the money conversation is so important ahead of time. Students need to know what schools they can afford before they begin looking, otherwise it becomes far too easy to arrive on campus hopeful, excited and empty-handed.

For the empty-handed students, accepted but desperate, Brooks said that “usually by the time we’re having that conversation there’s not a lot that I can do to help them.”

What can families do to avoid this problem? Kosakowski advised the simple remedy of ripping off the bandage: just talk. Parents need to bring this subject up with their children, from college tuition all the way down to the little stuff.

They might even be surprised to learn that their children aren’t surprised at all. With college costs skyrocketing past $50,000 per year, high school students are well aware that many schools have priced themselves out of reach for the average family.

And if they’re not, they need to be.

-Written for MainStreet by Eric Reed, a freelance journalist who writes frequently on the subjects of career and travel. You can read more of his work at his website A Wandering Lawyer.