Genesis Loans: There is a showdown going on between the Department of Education and students at failing for-profit Corinthian Colleges, who want their loans to be forgiven. Student and consumer advocates are backing a group of 15 students who are refusing to pay back their student loans. Now, the United States Senators and the Justice Department are seemingly backing the students as well. If the Department of Education remains in its current stance on the matter, it risks looking like an apologist for the school, whose programs have been heavily condemned by the Consumer Financial Protection Bureau.
Congress Rep. Maxine Waters (D-California) said Tuesday she supports the 15 former students who declared last week they won’t make payments on their federal student loans. Waters, the top Democrat on the House Financial Services Committee, is the first member of Congress to publicly endorse the actions of the striking debtors, who refuse to repay loans taken out to attend schools owned by Corinthian Colleges Inc., the troubled owner of schools that the U.S. Department of Education recently bailed out.
As Corinthian has been systematically dismantled, it’s been forced to forgive some private student loans it lured students into taking. But so far the federal government has taken no measures to address the federal student loans taken out by Corinthian students, which Inside Higher Ed estimates to be more than half a billion dollars. As part of the deal for Corinthian Colleges to sell half of its campuses to ECMC Group, the CFPB won a battle in seeking a $480 million write-off of Corinthian’s private Genesis loans for student borrowers. According to CFPB Director Richard Cordray it “was a tremendously successful result for many thousands of young people and their families that had been seriously harmed by Corinthian’s deceptive marketing.”
This $480 million, however, just covers the Genesis loans, not the federal loans Corinthian students borrowed from the Department of Education. The 15 students and their advocates claim that since Everest, Heald, and WyoTech were purveyors of almost worthless credentials, these loans should also be forgiven. Luckily for students, due to an extension of the programs initiated under President Obama, there is room for more students to get into the available forgiveness programs. If you would like to see if you qualify for one of these programs, you can give us a call at (702) 747-9946.