Debt Relief For Victimized Students of Corinthian Colleges
Corinthian Colleges, also known as Everest, Everest University Online, Heald College and WyoTech among a few other for-profit establishments, closed their doors earlier this spring, but where does that leave students seeking debt relief since the collapse?
According to the Los Angeles Times, The U.S. Department of education is on the verge of formulating new regulations to assist students who have attended these colleges offering them some sort of debt relief “…and a better hold colleges accountable for wrongdoing.”
Ted Mitchell, Undersecretary of Education, explained the new rules will work in conjunction with an initiative already launched which will allow these former students to apply for federal loan forgiveness, stating they are intended to be more proactive in holding the institutions accountable for their wrong doing.
Trouble came to the Corinthian colleges early this year ending in the filing of a chapter 11 bankruptcy. As well as facing a financial crisis, the California Attorney General said these institutions fed off of single parents, targeting a demographic of ‘isolated’, ‘impatient’, ‘low self-esteem’ individuals, leading to Corinthian Colleges facing numerous investigations and lawsuits, including criminal investigations, reported the Los Angeles Times.
Since the collapse of the Corinthians a diverse set of activists, lawmakers and state attorney generals have asked the Department of Education to extend a helping hand to students carrying excessive student debt with no potential degree in sight. In June the DOE answered by offering additional debt relief options, allowing borrowers to apply for loan forgiveness if they believe they were a victim of these for-profit institutions. Mitchell claims the new regulations will outline the process for these federal borrowers.
Public hearing will take place sometime in Sept. 2015 on these proposed regulations, with a final regulation expected in November of 2016.
- Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
- Negotiates with your creditors on your behalf.
- Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
- Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
- Combines all your debts and creditors into one monthly payment.
- Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
- You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
- Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
- Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
- Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
- Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
- Borrowers can receive funds from their loan within only a few days.
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