Former Corinthian’s May Wait Months Before Getting Debt Relief
Since the collapse of Corinthian College early this spring, former students were elated to hear the Obama administration will offer loan forgiveness, but it may take several months before victim borrowers find the relief being sought.
Former students have threatened suing the government as opposed to patience while officials sort through thousands of claims.
Under the law, students have the right to apply for loan forgiveness should they have proof of being lured in using fraudulent tactics to borrow funds for college. For former Corinthian’s, eligibility for loan forgiveness comes under two situations – attendance of a school that closed on April, 27 2015 and they show proof of being lured in using devious methods. Further information may be found here.
In a report released Thursday, September, 3, monitor Joseph A. Smith said four attorneys have been hired to review the now 4,140 claims filed.
“Facts and law are clear,” Smith said while the team reviewed the claims.
A $30 million fine was levied by the Department of Education against Corinthian Colleges in California, Hawaii and Oregon in April after the school fabricated job placement rates of students, tying 1,992 claims specifically to this case. Smith said it may still take months before these claims are resolved.
Smith said an expedited process is underway for state attorneys general to submit evidence discovered in their investigations to enable claims to be grouped together, as there are still students in 20 states investigating or suing Corinthian.
“One reason this is taking time is we’re trying to be careful about the basis to create classes. Smith said to reporters. “But wherever we can, we will try to treat those claims alike.”
Last Wednesday, a bankruptcy judge approved Corinthian’s plan to liquidate assets, setting aside approximately $4.3 million to help students pursue loan forgiveness.
Funds will be allocated first to students who paid for classes just before the schools downfall, with a possibility the remainder will go to sue the Education Department to collectively discharge federal loans of all former Corinthians, said Scott Gautier of Robins Kaplan LLP, a student attorney.
Access to federal funding and bankruptcy are now lost due to allegation and charges against the school lying about the success of their programs.
Now under heat from lawmakers, officials said anyone who attended a school as of June, 20, 2014 may apply for a closed-school discharge of their federal loan as long as credits were not transferred to another school.
About $40 million has gone toward the resolution of the 3,128 approved loan forgiveness applications as of Aug. 21.
Corinthian students borrowed about $3.2 billion in federal loans since 2010 and U.S. Department of Education Under Secretary Ted Mitchell said he is uncertain of the total cost to forgive all eligible debt.