Senators Ask Department Of Education To Discharge Student Loans
While Corinthian Colleges — the failing revenue driven educator that owns for-profit colleges such as Everest University, Wyotech, and Heald College — deals with its sale to new owners, a few thousand of the schools’ students are left in limbo, unsure of who is in charge of their education — and unsure if that pricey education is justified regardless of the huge loans they’ve taken out to pay for it. Recently, a gathering of twelve U.S. Congresspersons asked the Dept. of Education to consider giving these students a way out of their federal student loans.
The letter mentions that the law provides “avenues for relief from overwhelming debt taken on by students at duplicitous colleges,” but that it requires the Department of Education to use its regulatory power to make those loan discharges possible.
“For this reason, we are writing to request that the Department utilize that authority and immediately discharge federal student loans incurred by borrowers who have claims against Corinthian.”
If this happens, it would include students covered under pending suits filed by attorneys general in states like Massachusetts, California and Wisconsin. It may in, in fact, cover all Corinthian students nationwide, as the company is currently being sued by the federal Consumer Financial Protection Bureau.
Corinthian’s immediate issues started in January last year when authorities from the Department of Education asked for top to bottom data about individual Corinthian students including their participation records, the occupations they wound up getting and their Social Security numbers.
Government authorities examined the data to determine whether the revenue driven school was complying with regulations connecting federal student loans to different measurable outcomes for students and graduates.
For reasons unclear, Corinthian failed to provide the records request to the satisfaction of Department of Education officials. The DOE responded by placing a hold on Corinthian’s federal aid funding for 21 days. This hold, combined with lower enrollment and pre-existing financial issues, caused a major cash flow problem for the company.
The Consumer Financial Protection Bureau announced it is suing Corinthian Colleges for illegal predatory lending. The Bureau is demanding that the school forgive more than $500 million in student loans. According to the CFPB’s complaint, Corinthian Colleges convinced students to enroll in the school by inflating its job placement rates. It even paid employers to hire graduates for at least one day in order to boost its numbers.
The Dept. of Education has previously stated that borrowers may request a discharge by asserting that the loan isn’t legally enforceable on the basis of a claim against the school, but the Senators point out that “The process for doing so… is far from clear.”
The letter also requests information from regulators on how the Department can clear up the process for requesting a discharge. There is also the question of whether affected student loan borrowers would be reimbursed for any amount already paid on a loan.
The Department of Education had already been looking into Corinthian Colleges’ practices, and is currently working with the school to sell and close down its more than 100 campuses, where approximately 74,000 students are enrolled. If you were enrolled in one of these schools and feel you may be victim of these predatory lending practices, give us a call at (800) 940-8911.
While details of this lawsuit are being worked out, Student Loan Services can help determine if you might qualify for the student loan forgiveness as a result of the lawsuit. And in the meantime, our team of dedicated student advocates will help reduce your monthly cost to the minimum amount possible until such a time that forgiveness may be a possibility.
Student Loan Services matches thousands of graduates with federal programs that are offered by The Department of Education to consolidate and lower their current Federal student loans. We help you take advantage of the latest regulations put in place by Congress and President Obama and potentially save thousands of dollars. Debt is hard to ignore. When you’re staring down a ballooning credit card balance and fending off insistent phone calls from angry creditors, it can be an all-consuming enemy.