Carrot and yardstick
Students deserve debt relief, but the truth should come first. Some 250,000 additional Corinthian Colleges alums are eligible to have their U.S. government loans forgiven after the defunct for-profit institution lied about their employment prospects. Meanwhile, a Thomas Jefferson Law School graduate lost her fraud case against the school for touting questionable job-placement data. Strict disclosure rules for all schools would be better than lawsuits and government aid as a way to ensure educator honesty.
Corinthian students heard some whoppers. The school boasted that nearly all graduates of its vocational programs got jobs when almost none did. Students who enrolled in its ultrasound, X-ray or radiology technician departments in California weren’t told until later that the programs never existed.
The school received swift punishment for its fibs last year, when federal officials cut off funding and hastened its demise. Thomas Jefferson Law School fared much better. A California jury on Thursday rejected Anna Alaburda’s claims that the San Diego-based institution misled her by not limiting its employment statistics to positions in the legal industry, as most other law schools do.
Both situations highlight the need for strong national standards on job-placement reports. Uncle Sam has plenty of incentive to create them. The Corinthian debacle alone could cost the federal government as much as $3.5 billion in uncollected loans. What’s more, some 2,500 students from other schools have filed claims of being misled about their employment prospects, according to a report prepared for the U.S. Department of Education.
As it stands, the standards vary widely from state to state. Federal and state officials did cooperate successfully in the Corinthian situation, running a months-long investigation that discovered fraud at 91 of the college group’s campuses.
But the process is unnecessarily complex. To forgive loans, federal officials must usually find a violation of state reporting laws. If no such laws exist, or they are too lax to cover fraud, some other ground for debt relief needs to be identified. If a school goes out of business, as Corinthian did, that can qualify.
The Education Department recently established employment-reporting requirements that for-profit schools must follow. But at this point, the rules are too loose to be effective. Strict national standards are overdue for students and taxpayers alike.