We’ve written before about how crushing student loan debts can be for borrowers. It’s bad enough for students with degrees from traditional four-year colleges (President Obama famously finished paying off his student loans while he was running for the Senate in 2004). But what about for students attending predatory for-profit schools which offer degrees of dubious usefulness? Well, some students can breathe a bit more easily now, as debt relief for Corinthian Colleges is on its way.
It’s getting pretty serious. A recent study showed that borrowers within the US owed a total of $1.4 Trillion in Student Loans, and no matter how you slice that up, it’s a lot of money for all involved. There is some good news though for a few lucky former students! News just broke, unfolding that around 41,000 former students of the for-profit and now defunct Corinthian Colleges will have their loans forgiven as a result of a settlement between Aequitas Capital Management, Inc. and various state and federal agencies.
Corinthian had long been the target of consumer complaints and regulatory actions concerning alleged deceptive marketing and poor student outcomes. However, the degree to which Corinthian was deceiving both students and the government did not become apparent until 2014, when the company shuttered all of its schools in response to the Department of Education’s imposition of a delay in granting federal funds. It was revealed that in order to meet federal regulations for aid to for-profit schools, which require that these schools receive a certain portion of their revenue from non-governmental sources, Corinthian partnered with Aequitas, which aggressively targeted students who they knew were likely to default on their loans, including homeless students and people with low self-esteem.
The settlement, which is in its final stages and must still win approval from the Oregon court handling the Aequitas bankruptcy, will fully discharge loans (including accrued interest) for borrowers who attended a Corinthian school when it closed in 2014 or who defaulted on their loans. All other borrowers (a small portion of the group) will have 55% of their loan discharged, including past-due interest on the forgiven amount. According to New York Attorney General Eric Schneiderman, the average borrower will receive between $6,000 and $7,000 in loan relief.
If you believe you might be eligible for debt relief under the terms of this settlement, you can reach out to your state attorney general’s office to learn more. Find your attorney general’s contact information here.