Is Genesis just the beginning?

Banksy on the Thekla, photo credit Adrian Pingstone

Can the government make a for-profit school tear up its private student loan promissory notes?  We’re about to find out.

The Consumer Financial Protection Bureau filed suit this week against Corinthian Colleges for alleged misconduct relating to its private loan program, called Genesis.  While lawsuits against Corinthian, which operates Heald, Wyotech and Everest, abound, something about this particular suit caught my eye.

The CFPB is asking the court to “order the rescission of all Genesis loans”.  In plain English: the government is asking a federal court to cancel all of the notes on at least 170,000 private student loans, with a combined balance of $568.7 million.  As in, tear them up.  Poof.  Make them gone, as though they had never existed. Continue reading

The Color of Student Debt

“Racial disparities in student debt are closely related to the stark racial disparities in wealth characterizing American society.”

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Race-based differences in student loans are little understood and often ignored in debates about higher education financing.  New research might help us to change that.  Back in 2010, the College Board noted that 27 percent of black bachelor’s degree recipients had student-loan debt of $30,500 or more, compared with just 16 percent of white bachelor’s degree students.  Of those who borrow, black students have an average of over $4,000 more debt than white students.

In “The Color of Student Debt,” researchers lay out evidence that two factors account for “over half of the black-white disparity in student loan debt.”

First, African-American families are much less likely to have wealth (as opposed to income) available to help family members attend college.  How much less likely?  Black families have, on average, six times less wealth Continue reading