The bankruptcy of Corinthian Colleges Inc., one of the biggest for-profit college chains, has set off a scramble to find a way to wipe away billions of dollars of student loans for those who attended its campuses, Reuters reported yesterday. More than 50 consumer and labor organizations sent a joint petition on Tuesday to U.S. Secretary of Education Arne Duncan, urging him to cancel federal student loans owed by 78,000 who attended Corinthian schools. The groups, including the National Consumer Law Center (NCLC), said that the Department of Education had the authority because Corinthian misrepresented its job placement rates and defrauded students by enrolling them in high-cost, low-quality classes. Corinthian settled allegations about misrepresenting job placements with the California attorney general in 2007. The Department of Education said it had not decided how any debt relief would work. Scott F. Gautier (Robins, Kaplan, Miller & Ciresi, LLP; Los Angeles), who is representing an official committee of students, said in an email that student debt "should be recognized as Corinthian's ill-gotten gains and should be recovered, if at all possible, directly by the government from Corinthian." Corinthian entered chapter 11 with $143 million in debt and about $19 million in assets.
