LOS ANGELES--(BUSINESS WIRE)--Attorneys representing an ad-hoc student group and seeking to represent the interests of an estimated 500,000 students of the recently-collapsed Corinthian Colleges Inc., have formally requested that a special committee be formed to provide meaningful participation by students. The aggregate claims may exceed $25 billion in the bankruptcy cases of Corinthian and its subsidiaries. Public Counsel Law Center, Robins Kaplan LLP, and Strumwasser & Woocher LLP said that the legal action is intended to ensure that student voices are heard in a case that will significantly affect their finances and their futures.
“By taking this urgent action, the students—the real victims in this unnecessary and heartbreaking scandal—will have their specific interests represented,” said Mark Rosenbaum, Director of Public Counsel Opportunity Under Law. “These students were offered one of the most precious gifts of a democracy—the promise to access an education. Instead, they became victims of an irresponsible and negligent corporate culture. These students’ only failure was that they trusted the false promises made to them, and believed too much in our national credo that the only sure way to opportunity is through schoolhouse doors.”
The students—those most affected by the fraudulent business practices that the Consumer Financial Protection Bureau called a “predatory lending scheme,” and which led to Corinthian Colleges’ demise—seek to represent their own interests in the bankruptcy case by establishing a special committee of creditors for students only.
“I want more than anything to see the door opened for all students who were harmed by these schools to finally have their voices recognized,” said Aeyla Admire, a former student at Corinthian Colleges subsidiary, Everest College, who was misled by Everest about her program’s accreditation and how her education would be financed. “We are the ones who are stuck paying back these loans we didn’t authorize, and who have had our credit ratings decimated by this debt.”
“The claims of current and former Corinthian students are unique and different from the trade creditors of Corinthian,” said Scott Gautier of Robins Kaplan LLP, bankruptcy counsel for the ad-hoc student group. “We hope that the U.S. Trustee will see the merit in establishing a separate creditors’ committee composed of and run by student representatives. To date, the students have not had an effective forum in which to collectively address their concerns and we have asked the U.S. Trustee’s office to establish the committee and provide them meaningful representation in the bankruptcy forum. Considering that hundreds of thousands of students have attended these schools, with program costs from $20,000 to $100,000, we estimate that the students’ damage claims could exceed $25 billion.”
“This committee will help students establish their right to redress for both the debts incurred, and the consequential damages that have been visited upon the student population. Moreover, the ability to work through an official committee will give the students the ability to focus efforts on redress, which will likely come, in part, through student loan forgiveness and ongoing programs to assist students with education and job placement. We believe that collective treatment is not only proper, but the most efficient and effective way for the bankruptcy estates to address these claims,” Gautier added.
Following are a few of the many examples of Corinthian’s fraudulent and misleading actions:
Tiffany Contreras enrolled in Everest College’s paralegal program in April 2013 and was nine weeks from graduating when the school closed its doors on April 27, 2015. She currently owes over $47,000 in subsidized and unsubsidized federal loans, as well as a private Genesis loan. The week before the school closed, Tiffany was asked to pay a $500 “repack” fee, and was told by an employee of the financial aid office that the school had been “repackaging” students’ loans without their permission. Read Tiffany’s story.
Sarah Dieffenbacher is a mother of four and the first person in her family to attend college. She studied at Everest College from 2007-2010 to become a legal assistant and was shocked to learn from a potential employer that her program was not recognized, let alone ABA accredited as Everest had claimed. She was also shocked to discover that she owed $110,000 in loans that the school took out in her name without notifying her. Read Sarah’s story.
Tasha Courtright had the highest grade point average at Everest College’s Ontario campus, where she completed an associate’s degree in criminal justice and a bachelor’s degree in business management. Everest recruiters aggressively pursued her, assuring her she would be earning $45,000 per year after completing her degree and claiming a 91 percent job placement success rate, which turned out to be untrue. She informed the recruiters that she could not afford college, and they told her they “ran the numbers” and assured her that grants would cover the cost of her program. She now owes $41,000 in debt and has never been able to obtain documentation of her loans. Read Tasha’s story.
Aeyla Admire, who completed Everest College’s medical assistant training program in 2006-2007 with straight A’s, is the first person in her family to go to college. She had hoped access to higher education would help her gain the financial security she never had growing up as the child of a single mother working minimum-wage jobs. Instead, Everest failed to help her access the job placement resources they had promised, and misled her about her financial aid, taking out over $17,000 in public and private loans without her authorization. Read Aeyla’s story.
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