For nearly a year, advocates and lawmakers have shared their dissatisfaction with the Department of Education’s pace and complicated process on discharging the student loan debt for students of now-defunct for-profit chain Corinthian Colleges. Today, the Department is expected to clear a path for debt relief for these students after determining that state investigations into the schools found enough proof that the company widely misled students about their futures if they attended the schools.
The Washington Post reports that the Dept. of Education determined that findings from joint investigations with several state attorneys general, including those from Massachusetts, Illinois and Wisconsin, provide proof that Wyotech, Everest University and Heald College campuses lied about how many students graduated from its programs, obtained gainful employment after attending the schools, and misled students on their job prospects during the enrollment process.
According to the Department of Education, under the law, students may be eligible for loan forgiveness of any federal Direct Loans taken out to attend a school if that school committed fraud by doing something or failing to do something, or otherwise violated applicable state law related to the loans or the educational services paid for.
While the rules are fairly straightforward, actually proving the hardship is difficult and often unclear. Education Department officials have said in the past that the agency failed to draft rules after the law was passed in the early 1990s. Until last year, only five applications have been submitted to the Department, and just three were granted.
That means when students submit their claims, it’s unclear what proof is needed to demonstrate a school committed fraud. Earlier this year, the Dept. began taking steps to clarify the process by drafting new rules.
The Department’s announcement today means that thousands of students who attended Everest and Wyotech schools in more than 20 states can now seek loan forgiveness by having their claims grouped together to speed up the process.
A similar deal was created for students of Heald College campuses in California, Hawaii, and Oregon last year after the Dept. levied a $30 million fine against the schools for falsifying job rates.
Independent monitor for the relief process, Joseph Smith, said at the time that his team of four attorneys had reviewed claims where the “facts and law are clear.”
The Post reports that anyone who was enrolled at one of the Everest or WyoTech programs listed on the department’s website can apply to have their federal student loans forgiven by filling out an attestation form found at http://ift.tt/1PuOcMe.
The Dept. says it will also notify the affected former students through mailers, email, partner organizations, and other means.
“When Americans invest their time, money and effort to gain new skills, they have a right to expect they’ll get an education that leads to a better life for them and their families. Corinthian was more worried about profits than about students’ lives,” Education Secretary John B. King tells the Post. “Through these important partnerships with states’ attorneys general, we are pleased to offer relief to Corinthian students who were defrauded.”
In all, independent monitor Smith said on Friday that the Dept. has approved student loan discharges for more than 8,800 former Corinthian students, totaling more than $130 million. About $42.3 million is related to defense claims from 2,048 borrowers, the Post reports.
So far, nearly 600 Heald students have been granted $10.3 million in total relief, and another 190 Everest and WyoTech students have been approved for $4.1 million in relief.
While those numbers may seem large, they’re only about half of the total number of claims submitted, Smith says, noting that there are still 8.952 open defense claims that need to be reviewed.
Corinthian students may have a clearer path towards debt relief [The Washington Post]
by Ashlee Kieler via Consumerist
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