ED Announces Additional Debt Relief for Former Corinthian Students

By Allie Bidwell, Communications Staff

The Department of Education (ED) on Friday announced it will forgive the student loans of thousands of additional borrowers who were defrauded by the now-defunct Corinthian Colleges chain at campuses across the country.

ED announced it had expanded the scope of its debt relief to include 91 former Corinthian campuses under its Everest and WyoTech branches, in tandem with the release of the third report from Joseph Smith, special master for borrower defense. ED said students who attended these schools in 20 states can apply for debt relief through an attestation form similar to the one made available to former Heald College students last summer.

Overall, ED has approved loan discharges for more than 8,800 former students, totaling more than $130 million in debt relief. Several hundred other borrower defense claims are still being reviewed, according to Smith’s latest report. ED moved forward with granting loan discharges to additional students on a wide scale after uncovering evidence of misrepresentation while working with several state attorneys general.

“When Americans invest their time, money and effort to gain new skills, they have a right to expect they’ll get an education that leads to a better life for them and their families,” said Education Secretary John B. King, Jr., in a statement. “Corinthian was more worried about profits than about students’ lives. Through these important partnerships with states’ attorneys general, we are pleased to offer relief to Corinthian students who were defrauded. And we will continue to take action to protect students and taxpayers from unscrupulous companies trying to profit off of students who simply want to better their lives.”

NASFAA has resumed its partnership for ED with Beyond 12 to further assist displaced Corinthian students. The coalition will connect students displaced by the closure of Corinthian Colleges with volunteers who are knowledgeable about higher education, academic planning and financial aid.

Still, the Debt Collective, which represents several hundred students who have been organizing debt strikes and protests over ED’s handling of the borrower defense process, said the latest announcement is a “slap in the face” by not granting broad relief to students who have been seeking relief for more than one year.  

The collective said in a statement that it will “keep fighting with students until they receive every cent of relief to which they are entitled by law and to which they have been continually denied by the agency that was supposed to protect them from fraud and abuse in the first place.”

Americans for Financial Reform – a nonpartisan and nonprofit coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based, and civic and community groups – said in a statement that while it appreciated the news of additional debt relief, the “pace of relief for wronged Corinthian students … remains far too slow, and its scope frustratingly narrow.”

According to Smith’s report, ED will grant additional relief to 546 former Heald College students who made borrower defense claims, totaling about $10.3 million, and to 190 borrowers who filed claims against Everest and Wyotech, totaling about $4.1 million. To date, ED has granted debt relief to 2,048 individuals who filed borrower defense claims, totaling about $42.3 million. It has also, as of March 1, processed 6,838 closed school discharge claims, totaling more than $90 million in debt relief.

Smith noted that there are several hundred other borrower defense claims that remain under consideration, and have not yet been recommended for relief because the borrowers either were not enrolled in “programs or time periods that were covered by the ED Fine Letter,” or they did not have Federal Direct Loans.

“This does not mean that material misstatements or other wrongdoing that could be the basis for BD relief did not occur with regard to these claims,” Smith wrote. “These claims will be reviewed.”

 

Publication Date: 3/28/2016


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