WSJ Defends Shuttered For-Profit College Despite Evidence Of Fraud

Everest CollegeThe Wall Street Journal editorial board falsely blamed the Obama administration for the closing of for-profit college company Corinthian Colleges, ignoring mountains of evidence that the company engaged in exploitative practices against its students.

Corinthian Colleges Inc. announced on April 26 that it would immediately shut down its 28 remaining campuses, following reports that it has been "teetering on the brink of collapse for months." About 16,000 students in five states are affected by the move, which called “the final act of a slow-motion disintegration.”

On April 27, The Wall Street Journal editorial board defended Corinthian, claiming that the “feds and [California Attorney General] Kamala Harris put 16,000 students on the street.” The editorial alleged that the Department of Education (ED) “began to drive Corinthian out of business by choking off federal student aid,” that Corinthian was held at “government gunpoint,” and that an ED “penalty scared away prospective buyers.” The editorial concluded:

Though Corinthian has established an escrow account for refunds, the reserve likely won't be sufficiently capitalized to cover 16,000 students. Maybe there would be more money for students if Corinthian didn't have to spend so much defending itself from the government. But for the Obama Administration, protecting students has always been second to its mission of doing whatever it takes to put for-profit schools out of business.

The WSJ's attempt to blame the ED for Corinthian's collapse is misguided given that the for-profit company has been under investigation for years for “exploitative practices,” including “predatory lending, deception in performance data and job placement rates, and bogus career services.” Last summer, the ED cut Corinthian off from receiving federal aid, and penalized them with a $30 million fine earlier this month for 947 confirmed cases of “misrepresentation of job placement rates.” California Attorney General Kamala Harris filed a lawsuit against Corinthian in 2013, alleging that the company “targeted some of our state's most particularly vulnerable people -- including low income, single mothers and veterans returning from combat.”

A group of former Corinthian students also announced earlier this year that they would “not repay any federal student loans they took out to attend Corinthian's schools,” calling it a “debt strike.” Officials from the ED, Consumer Financial Protection Bureau, and Department of the Treasury met with those former students last month and listened to claims that “they were either lured into taking out loans with bogus promises of future job prospects or were simply signed up for loans by their school's staff without their consent.” Think Progress further noted in its “inside story” on Corinthian:

The company's bait-and-switch approach to recruiting students -- or making sales to customers -- lured many ambitious people who thought they were investing in future economic security, workplace dignity, or job satisfaction. But ultimately, many of them were just buying a meaningless degree at a very high price.

This isn't the first time the WSJ has used faulty arguments to defend for-profit colleges, or even its first foray into deceptive reporting on higher education and student debt. This editorial echoes a larger trend within conservative media to ignore the realities of America's student debt crisis.

Image at top via Flickr user Jeramey Jannene using a Creative Commons license.