Why did the Department of Education bail these bastards out?
And as Matthew Bruckner explains today in Credit Slips, not only did the Administration rescue enable the government to escape losses on debt that otherwise could have been wiped out, but the DoE even reaped fees for salvaging this toxic operation:
While the CFPB continued to prosecute its lawsuit, the ED worked with Corinthian Colleges to find a buyer and prevent its campuses from shutting down. Why didn’t the ED join the lawsuits or pending investigations by “nearly half of the country’s state attorneys general, the Department of Justice, Securities and Exchange Commission, and the Consumer Financial Protection Bureau”?
The deal that the ED has apparently blessed may save the ED approximately $600 million, but it seems to do so at the expense of the students the ED serves. Ordinarily, when an institution of higher education closes, its students can avail themselves of the “closed school discharge,” which enables students to discharge 100% of certain federal student loans if they meet certain criteria. But the ED has apparently approved a deal struck between Corinthian Colleges and the Education Credit Management Corporation (“ECMC”), pursuant to which many students willnot be able to avail themselves of the closed school discharge. Moreover, the terms of the sale to ECMC provide for various payments to the ED, including $12 million at closing and a $17.5 “earnout” to be paid over the next seven years. In short, the ED is preventing some students from discharging debts that many think they were fraudulently induced to take out, and will receive a direct financial benefit from an entity that appears to benefit from this decision. As a result, some consumer advocates have claimed that the ED is hopelessly conflicted.
How the ED can claim that it’s protecting students when it’s depriving some them of the choice of whether to continue their studies or discharge many of their federal, student loan obligations, especially when the ED is collecting a fee in the process?
So just like homeowners who served to foam the runway for banks, students continue to be cannon-fodder for predatory lenders, with the Department of Education taking its cut for protecting Corinthian Colleges’ allies from suffering the full consequences of being in bed with such a persistent bad actor. There seems to be no limit to the willingness of this Administration to grind down what it apparently regards as little people to do damage control for itself and its powerful allies.
Obama wants $60 billion dollars over the next ten years (that’s $6 billion dollars each year) to pay the tuition of “deserving students” who want to attend a junior college.
Obama also wants to increase next years defense budget by $38 billion dollars (that’s $380 billion dollars over ten years).
The Republicans have already told Obama that his tuition proposal is “dead on arrival.”
Wanna bet that the Republicans give Obama every one of those $38 billion defense department dollars?
The priorities of the Republicans are completely screwed up when they consider that spending billions of dollars for more war is more important than spending billions for more education.
NOTE: The price of a share of stock for giant defense contractors Boeing and Northup Grumman is up about 5% today on Wall Street. See how easy it is to make money in the stock market? If you have any money lying around to invest that is.