June 13, 2022
EDUCATION DEPARTMENT WON’T PURSUE CORINTHIAN EXECS: The Biden administration earlier this month moved to forgive all remaining federal student loan debt owed by more than a half–million borrowers who attended schools owned by the now-defunct Corinthian Colleges. The $5.8 billion of relief is the largest-ever single discharge of federal student debt.
— Vice President Kamala Harris, who sued Corinthian for fraud when she was California attorney general, said that “Corinthian purposely and fraudulently went after the folks most in need.”
— Administration officials said the relief came after they “reached a determination that every borrower who attended Corinthian was subject to illegal conduct.”
— But the Education Department has no plans to recoup the cost of that loan forgiveness from any of the company’s former executives or owners after department officials have determined they lack the legal authority to do so.
— “We cannot currently hold former owners or executives of Corinthian accountable because none of them had signed the Program Participation Agreement for federal student aid that the Education Department had with Corinthian,” an Education Department spokesperson said in a statement. (Bloomberg’s Michelle Leder first reported the department’s position).
— A department spokesperson did not answer a follow-up question on who signed any of the various Corinthian PPAs over the decade it was in operation. Some PPAs were signed by Corinthian’s last CEO, Jack Massimino, according to a 2012 court filing. Massimino and former CFO Robert Owen in 2019 agreed to pay civil penalties of $80,000 and $20,000, respectively, to resolve the SEC’s allegations they had misled Corinthian investors. The pair did not admit to wrongdoing as part of the settlements.
— Some Congressional Democrats have urged the Education Department for years to be more aggressive in going after the owners and executives involved in fraud or other misconduct at for-profit colleges. But department officials are now questioning whether they have the legal tools to do what some Democrats want to see.