More than 1,300 students displaced by the closure of Corinthian Colleges – and those who felt they were victims of fraud regardless of whether or not their campus closed – were assisted by a partnership between NASFAA, the Western Association of Student Financial Aid Administrators (WASFAA), the California Association of Student Financial Aid Administrators (CASFAA), and Beyond 12.
The partnership was started in June 2015 to connect Corinthian students and those who felt they were victims of fraud with volunteers who are knowledgeable about higher education, academic planning and financial aid. As previously reported by NASFAA, the U.S. Department of Education (ED) provided guidance on how eligible students could apply for closed-school federal loan discharge and extended the general 120-day window to June 20, 2014, due to the extenuating circumstances of this situation.
Students who believe they were victims of fraud, regardless of whether their school closed, are allowed to seek loan forgiveness under the “defense to repayment” or “borrower’s defense” law. While ED has yet to issue specific guidance for these students, with the exception of Heald College, it has appointed a Special Master, Joseph A. Smith, who will inform the debt relief process for former Corinthian Colleges students.
Between June and the end of September, the partnership received a total of 1,370 tickets, 736 of which were related to financial aid. Just over 500 tickets were labeled for follow-up for fraud, which includes 228 financial aid tickets. NASFAA would like to thank all the members of this partnership for their work and offer special thanks to Scott Cline from CASFAA for the services he provided to the students who submitted tickets.
NASFAA has concluded its work with the partnership, but the aftermath of Corinthian’s closing is still being felt. At the end of October, a federal court ruled against the institution in a lawsuit filed last year by the Consumer Financial Protection Bureau (CFPB) over predatory lending practices. The court’s default judgment requires Corinthian to make more than $530 million in restitution payments to the affected students who took out the private loans Corinthian backed.
The judgment also claims Corinthian pushed the private loans on students between March 2008 and July 2014 in order to “charge its students more in tuition than would be covered by Title IV funding from [ED.” More than 60 percent of students who took out these private loans defaulted within three years, the judgment said. By comparison, the national three-year cohort default rate for federal student loans is 11.8 percent.
Publication Date: 11/13/2015