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This following Monday the Education Department proposed a rule following last years collapse at Corinthian Colleges. The rule suggests laying out a clear relief process for borrowers who believe they were lied to about job prospects after college or otherwise deceived in order to enroll in the school. The proposal aims to hold schools accused of fraud or financial risk accountable for their actions. This requires them to notify prospective and enrolled students, as well as set money aside to help for future claims against the school.

“A college degree remains one of the best investments anyone can make in his or her future,” Education Secretary John B. King Jr. said on a call with reporters. “But that’s only true if it’s a meaningful degree that helps you land a better job, not if it’s a worthless piece of paper that’s an artifact of deception rather than proof of accomplishment.”

Undersecretary Ted Mitchell said the new regulations, expected to take effect in July 2017, “would replace a complicated uneven and burdensome standard that varies by state with a new robust federal standard that will allow easy use by students.”

These new provisions would not only bar colleges from forbidding students from class-action lawsuits as part of enrollment agreements, they would also streamline debt relief for groups of students if they all experienced the same misconduct by a school.

The Debt Collective, a New York-based group that has lobbied to have the student loans of Corinthian students canceled, was cautious in its response.

“What the department released today amounts to little more than a loose statement of intention to do right by student debtors after decades of collaboration with corrupt for-profits,” spokeswoman Laura Hanna said in a statement.

The group is concerned the education secretary would have too much power in deciding relief to groups of borrowers.

In 2011, a whistleblower raised concern about Corinthian College alleging that employees of the for-profit chain fabricated employers to make it appear as though unemployed graduates had secured good jobs in their careers of study. In 2013 California’s attorney general Kamala Harris filed a lawsuit alleging rampant lies to students about job placement. Last year Corinthian filed for bankruptcy protection, closing schools and leaving thousands of students with tremendous debt and frustrated efforts to earn their degrees.

Thousands of requests from Corinthian students asking for relief from their federal loans continue to be investigated by the Education Department. Thus far, it has erased the debt for more than 8,800 former Corinthian students, totaling more than $132 million. This is only a very small fraction of the estimated $3.6 billion in federal loans given to Corinthian students.



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