Yes, I know that means the taxpayer footing the bill. The government was responsible for accrediting, regulating and auditing the colleges. The government, and collectively the people, are responsible for any failures in that duty and any individual citizens harmed as a result deserve compensation.
Note I'm not a US citizen, so my comments are meant in general.
Eh, it's not "real" money. Students will have debts forgiven when it's politically expedient to do so.
Why not? It was real to the tax payers who paid it to the government and real to the Corinthian employees who were paid by the school and it will be real to the students as they struggle to pay it back over many years.
(For some definitions of " real".)
Right now, the consequences of forgiving a billion dollars of student debt are immeasurable. It's a small amount to spread over so many people, and ultra easy/cheap borrowing by the federal government can delay the consequences for a long time.
Think about it. We exchange dollars, euros, bits, whatever all day long. Do you ever stop to think, "Why does this hold any value to me?" Its because someone else will accept it in exchange for goods or services.
The Onion, as always, captures this perfectly: http://www.theonion.com/articles/us-economy-grinds-to-halt-a...
Now ask yourself: what do central banks hoard? Whatever they hoard must be, at the very least, a more "real" kind of money than the money they print. Do they hoard diamonds? No. Do they hoard platinum? No. Do they hoard fine art? No. Do they hoard expensive wine? No. What do they hoard? Gold. And why do they hoard gold while publicly stating it's a useless and worthless metal? "Tradition", according to Ben Bernanke.
So if you believe our rulers, you can sleep sound in knowing nothing is real money, and the worthless stuff central banks hoard, they're doing it just because it's tradition. All this work of moving this stuff around the globe in armored planes and escorted ships, it's all for tradition, you see.
In a nod to Accelerando (http://en.wikipedia.org/wiki/Accelerando), the only value store I could see being useful in the future is perhaps reputation.
A relative of mine works there and said they were about to be sued by the Department of Education over fraud in their student loan department. The settlement forced the company to sell or close all of it's colleges and no senior management or administrative staff is allowed to stay with any of the colleges.
It seems pretty clear that Corinthian did some bad things, and it's likely the clause the article mentions in federal loans might give _some_ students an way out of debt:
“In some cases, you may assert, as a defense against collection of your loan, that the school did something wrong or failed to do something that it should have done.”
IANAL, but I think it's pretty unlikely the government would let all of the students off the hook. (For a billion dollars!)