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The U.S. Department of Education is sorting through nearly 20,000 loan-forgiveness requests from students asserting that their for-profit colleges misled them when they took on heavy debt burdens to pay for expensive programs.

The Wall Street Journal recently reported that the Department of Education is processing 19,657 so-called "borrower's defense requests" in which former students have an opportunity to demonstrate that they were misled at the time of enrollment with promises relating to programs and job placement. 

To date, the government has allowed around 3,400 borrowers to cancel $27 million in student loan debt, with the vast majority relating to former students of Corinthian Colleges, Inc., the for-profit giant that ran Everest, WyoTech and Heald College before it collapsed as a result of intense federal scrutiny.
 
 
A California state court judge has hit now-defunct Corinthian Colleges with a $1.1 billion judgment for deceptive trade practices that played a significant role in the unraveling of the for-profit education giant nearly a year ago.

The final default judgment entered by San Francisco Superior Court Judge Curtis E.A. Karnow found that Corinthian had "knowingly misled students with phony job numbers and advertisements for programs that didn't exist, illegally used official military seals in its promotions and engaged in unlawful debt collection practices, among other violations," according to a report in the San Jose Mercury News.

The suit against Corinthian was brought by California Attorney General Kamala Harris, one of a number of state and federal regulatory actions brought on behalf of current and former students of for-profit giant Corinthian, which aggressively and deceptively marketed education programs under brands that included Heald, Wyotech and Everest.

In April 2015, under intense regulatory pressure, Corinthian suddenly closed, filing bankruptcy a month later.

In a news release, the California attorney general hailed the $1.1 billion judgment, saying, "This judgment sends a clear message: there is a cost to this kind of predatory conduct."

 
 
The Obama Administration's ongoing efforts to regulate the for-profit college industry have yielded a $30 million fine against Corinthian Colleges and threaten to result in similar penalties against other schools.

On April 14, the U.S. Department of Education informed Corinthian that it intended to fine the for-profit education company's  Heald College subsidiary $29.66 million for misrepresenting its placement rates to current and prospective students and to its accreditors, and for failing to complete with federal regulations requiring the complete and accurate disclosure of its placement rates.  Heald is a 13-campus subsidiary with schools primarily in California and other western states.

The government claimed that it had identified more than 900 separate instances of The government's sanctions also prohibit Heald from enrolling new students.

"This should be a wake-up call for consumers across the country about the abuses that can exist within the for-profit college sector," Education Secretary Arne Duncan said in a statement. "We will continue to hold the career college industry accountable and demand reform for the good of students and taxpayers."

As noted by Inside Higher Ed, the regulation used to punish Corinthian and Heald is a a job-placement requirement adopted in 2010 that "has emerged as a possible tool to crack down on for-profits."  The regulation requires colleges to disclose job-placement rates of graduates in programs that fall under "gainful employment."

With respect to Heald's violations of the accurate job-placement reporting requirements, the Education Department's findings were devastating.

The Huffington Post reported that the government had found that  Heald’s "inaccurate job placement rates constituted a 'substantial misrepresentation,' a finding that allows the department to prohibit the school from accessing federal student aid such as Pell grants and loans that students would use to pay for tuition."

"For example, Heald allegedly misled prospective students by advertising false job placement rates that omitted the fact that many of its graduates simply weren’t counted. It also told prospective students that it confirmed graduates’ employment with the graduate or her employer. In reality, the Education Department said, the school in many cases simply relied on its own career services staff for confirmation."

"Heald also paid staffing agencies to hire its graduates, the Education Department said, and counted them as officially employed in their field. In one case, the department found a Heald graduate who only was employed for two days moving computers and organizing cables."