ED Appoints Special Master For Corinthian Debt Relief Plan

By Brittany Hackett, Communications Staff 

The Department of Education (ED) last week appointed consumer and taxpayer advocate Joseph A. Smith as a special master to inform the debt relief process for former Corinthian College students. 

Smith's appointment is part of a larger ED plan to assist the students impacted by the closure of Corinthian Colleges and students who believe they were victims of fraud, regardless of whether their school closed. Part of the plan includes a partnership between NASFAA, the Western Association of Student Financial Aid Administrators (WASFAA), the California Association of Student Financial Aid Administrators (CASFAA), California State University (CSU) Fullerton, and Beyond 12 which began earlier this month and will run through September 2015. The initiative aims to connect students displaced by the closure of Corinthian Colleges and those who feel they were mislead by their school, regardless of whether their campus closed, with volunteers who are knowledgeable about higher education, academic planning, and financial aid.  This partnership has already received more than 400 student inquiries in its first three weeks.

In his role, Smith will advise ED on issues related to Corinthian but will not have the ultimate decision-making authority regarding debt relief to Corinthian students. He will advise Under Secretary Ted Mitchell on three areas:

  • How to create a simple application for debt relief for all federal borrowers applying for loan forgiveness;
  • Creating recommendations on issues of law and fact related to borrower defense claims received by ED; and
  • Making stronger the process by which ED can recover money from institutions after borrower defense claims have been resolved successfully.

The "defense to repayment" and "borrower's defense" provisions in the law allow borrowers to seek loan forgiveness if they believe they were defrauded by their college under state law. This provision has rarely been used in the past. Smith will also assist in the development of a broader system to aid students at other institutions who believe they were defrauded and are seeking Federal Direct Loan debt relief. He is expected to issue a report at the end of the summer summarizing his initial findings and advice to ED.

There are a number of ways NASFAA members can help spread the word on this partnership: 

  • If you live in California, Arizona, New York, Hawaii or Oregon:
    • Refer students who come to your office to NextStepsEdu.org so they may complete a “help ticket” and obtain more information specific to their situation prior to making any decisions.
    • Share this initiative and these resources with other offices on your campus, such as Admissions/Transfer Services or Academic Advising, so they may encourage students who come to their office to complete a “help ticket” and obtain more information specific to their situation prior to making any decisions.
  • Financial aid offices in other states: Share the details of this initiative on your social media pages to help us get the word out and reach as many of the displaced students as possible.
  • State and regional associations: Share this initiative on your social media pages and with the financial aid offices in your area.

 

Publication Date: 6/29/2015


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