On June 8, the U.S. Department of Education (Department) published information related to a new debt relief process for Corinthian students, with the title of “Fact Sheet: Protecting Students from Abusive Career Colleges” (Fact Sheet). The information below summarizes the Fact Sheet, including the impact to students and borrowers.
SUMMARY OF DEBT RELIEF PROCESS
The Department’s press release outlined two types of relief:
- For Corinthian students whose schools have closed down.
- For Corinthian students who believe they were victims of fraud, regardless of whether their school closed.
Corinthian students whose schools have closed
For students who attended a Corinthian College that closed, the Department extended the window of time in which Corinthian students will be eligible for a closed school discharge of their federal student loans. Rather than the current limit, which requires the student to be enrolled within 120 days of the school closing, the Department expanded the eligibility date to capture students who attended the closed Corinthian campuses after June 20, 2014, which was the date Corinthian entered into an agreement with the Department that required them to sell or close their schools.
Because the expanded eligibility for closed school loan discharge only applies to those students who attended a Corinthian College that subsequently closed, current Zenith students are not eligible.
Corinthian students who believe they were victims of fraud regardless of whether their school closed
Students who attended a Corinthian College—Everest, Heald or WyoTech—who believe they were victims of fraud or other violations of state law by the school can make a claim for debt relief under a legal rule called “borrower defense to repayment.” This rule applies to all public, private and for-profit schools across the country, and requires students to show that they have a legal claim against their college.
Former Corinthian students who apply for borrower defense can have their federal loans placed into forbearance while the claim is under review by the Department. Former Corinthian students whose loans are in default can have collection activities stopped. Interest will, of course, continue to accrue during the forbearance or stopped collections period.
The Department has also indicated that, wherever possible, it will rely on evidence established by appropriate authorities in considering a “borrower defense of repayment” claim for whole groups of students. In an effort to simplify and speed up the process of applying for loan forgiveness, the Department has announced that if the student had relied on incorrect placement rates, the student may apply for a discharge of their federal Direct loans through a streamlined process. The Department has published a list of the programs, campuses and impacted enrollment periods on its website. The earliest enrollment date for impacted programs is July 1, 2010.
RESOURCES FOR STUDENTS