The Arne Duncan Shuffle: Some For-Profit Colleges Have "the Ethics of Payday Lending" | David Halperin

Arne Duncan Transcript: Some For-Profit Colleges Have "the Ethics of Payday Lending" | David Halperin:

 For-Profit Colleges Have "the Ethics of Payday Lending"

Arne Duncan:        Well I think we've been very clear and have a, you know, five or six year track record of - and to be very clear, we're supportive of for profits that are helping real people gain real skills that lead to better jobs. We want them to grow and to assert more students.

But where Congress has fought us every step of the way when we're just trying to bring some basic accountability to the industry, it's been a huge problem. 
( Just Like CHARTER SCHOOL INDUSTRY ACCOUNTABILITY) 
And again what we're seeing in situations like Corinthian is just - it's indefensible. ( Just Like CHARTER SCHOOL INDUSTRY)

And this is a wakeup call not just to the industry, but this has to be a wakeup call to Congress. And I'd be hard pressed to believe that folks on either side of the aisle want to stand behind guys where there is so much deception of students and waste of taxpayer dollars.

And so going back again to gainful employment, going back to bringing more resources so that we can do more investigative work here, Congress has to stop defending the status quo that's indefensible, and has to be part of the solution, not part of the problem.

And candidly, far too many members of both sides of the aisle up to this point have been part of the problem. 

The question is does this - is this a watershed moment? Is this a fork in the road where they begin to understand that, you know, bad actors simply can't be tolerated?

Michael Shure:      Yes, thanks for taking the question. You know many people who are observing this situation see Corinthian as the first domino to fall. Is this something that the Department looks at as precedent setting going forward if some of these other schools fail in the same way as Corinthian has?

Arne Duncan:        It's a great question. And sadly we think this will not be the last domino to fall, and that there may be more. And we're looking at this with an eye first to doing the right thing by the Corinthian students. But we're also - I try to be explicit in what I was saying.

We are also today trying to send a very clear message to this industry. And we're also trying to send a very clear message to Congress. And I wish we could say that, you know, Corinthian is the last of these situations. But that's not reality. That's not reality.

Students everywhere deserve and need the opportunity to make their lives better through education - to climb the economic ladder. That's exactly what these students tried to do. But a lot of them ended up with huge debts and a degree that meant little to employers, if they got a degree at all. The whole idea of a career college was a farce for them. (Unintelligible) about bad actors (unintelligible) college industry.

And that's why we're all so determined to crack down on colleges that leave students with huge debt, worthless degrees and few meaningful job prospects.

Some of these schools have brought the ethics of payday lending into higher education. They prey on the most vulnerable students, and leave them with debt that they too often can't repay. We must have accountability to protect both students and taxpayers.

And that's what we're working on through a series of actions that are simply unprecedented. No previous administrations, no state and no Congress has ever done this. Simply put, we cannot tolerate the situation where all the risk of higher education is born by students and taxpayers, while the for-profit industry uses its financial support to try and block change in Congress. That means we must do business differently.

A couple of quick messages - first, to students: We firmly believe that you deserve a college education free from rip off scams. And if you've been defrauded by a school, we'll make sure that you get every penny of the debt relief you are entitled to through a streamlined process as - as streamlined a process as possible. We're going to make that as simple as we legally can, while also safeguarding the interest of taxpayers.

To members of Congress on both sides of the aisle: I want to be very clear. Students and taxpayers need action to strengthen accountability. Beef up efforts to protect students and taxpayers from waste and fraud. Don't fight them off. And that's rules that hold colleges, not taxpayers, responsible for fraudulent acts, and provide additional resources to our department that we requested to fully enforce accountability.

To taxpayers: I want to say we are committed to being responsible stewards of your investment in educational opportunity. And to college executives and the management teams and their boards of directors, I want to say very clearly - keep your promises and make sure you're delivering real value for students. If you're doing that, you'll have our full support. But if you defraud students and if you're not honest, we'll work across the administration and make sure the full weight of the law is brought to bear.

And finally to the nation, I say it's time for action, so we can see fewer students in the situation that these Corinthian students are in today. And that's why I appreciate so much the work that Ted and his team have been doing. They're extraordinarily smart, but most importantly they have a real heart. They have a real care for students. I'm grateful to have Ted and team leading this effort.

Arne Duncan:        In terms of timing we did a pretty - our team did a pretty thorough investigation of Corinthian and found from things that were extraordinarily awry - wrong, and that led to them being shut down. And we're going to continue to look at other places. And sadly this may not be the only case where this has to happen.

And at the end of the day - I just want to come back. We have to challenge Congress to stop fighting us on this. If you look at the history of what we've tried to do over the last five or six years on this, there's a lengthy track record here going back to gainful employment, where not just the industry which we expect. But Congress is part of every step of the way.

And we're going to continue to try to do the right thing for students and taxpayers. But hopefully Congress will wake up here and get members on both sides of the aisle, and figure out that they need to strengthen our hand in dealing with these guys.

Ted Mitchell:        So the - let me see if I can help clarify it. So the students who we're considering as a group today are the Heald College students who were enrolled in programs where we have findings of misrepresentation. And so that's the first in category.

Next are...

Arne Duncan:        And that are - maybe 81% of programs.

Arne Duncan:        And to be clear, this is not like we relied on them too much. We did our own independent investigation. But (unintelligible) in places like this are, you know, passing accreditation with flying colors, we have prospects losing some credibility. And accreditors need to really, really take this seriously.

Undersecretary Ted Mitchell Doing for America

What He Did To California

Undersecretary Ted Mitchell is the former CEO of the NewSchools Venture Fund and served as the president of the California State Board of Education. 

I hope all of you see that the steps we are announcing today are part of the Obama Administration's comprehensive approach to protecting students, eliminating bad actors and encouraging behavior that improves student outcomes, especially in making it easier to afford and complete a degree that will lead to good outcomes.

So, we want to create a process that is based on our established legal authority that will enable us to work through claims as quickly and as efficiently as possible, requiring the least amount of effort on the part of borrowers.

f we were to look at the total amount of outstanding loans for Corinthian students over the last five years, we would be looking at about $3.5 billion. But I think for today's news it's more appropriate for us to be looking at the Heald students.

And while we are still working that out, we believe that there are about 40,000 borrowers who are impacted by today's decision, and that those borrowers have outstanding loan balances in the neighborhood of between $500 and $600 million.

Kerry Field:          My question was how will the Department determine that a state law has been violated? Will there need to be a lawsuit with findings?

Ted Mitchell:        So this is exactly one of the jobs for the special master will be to help - to advise us on how best to go forward with that. But as is the case in our Healed findings today, in that case we - the Department through its own work - established that state law had been violated.

Kerry Field:          But will the Department rely on other people's findings as well?

Ted Mitchell:        So, I think it that it's important to distinguish between investigations and formal court decisions. And so we want to look at - and the special master will guide in this - we want to look at evidence when there is relevant evidence. And we will, you know, certainly take evidence - (unintelligible) kinds of evidence into account. And certainly judgments in state court would be pretty critical to us.

READ THE COMPLETE TRANSCRIPT HERE: Arne Duncan Transcript: Some For-Profit Colleges Have "the Ethics of Payday Lending" | David Halperin:

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