Education Department Extends Loan Forgiveness to Corinthian Students
Nov 18th, 2015 @ 8:52 PM by Amber Nelson
The U.S. Department of Education has decided to expand its loan forgiveness program to more former students of the for-profit Corinthian Colleges system in the wake of an investigation of how the colleges defrauded students about job placement rates.
Earlier this year students who had attended Heald Colleges, one of the Corinthian College brands, were allowed to receive loan forgiveness for any high-cost private student loans they took out through their school. The government judged the loans and loan-selling tactics to be misleading. In February 2015 alone, Heald students received $480 million in federal loan forgiveness. Then just two months later, after getting hit with a $30 million fine for misrepresenting its job placement rates at Heald Colleges, Corinthian posted its plans to close all its doors for good and has since filed for bankruptcy.
After further investigation by the Education Department, the Consumer Financial Protection Bureau (CFPB) and California Attorney General Kamala Harris, it has been found that misrepresentation was also going on at Corinthian’s Everest and Wyotech brands as well.
“Corinthian preyed on vulnerable students who are now buried under mountains of student debt,” said Attorney General Harris. “Today’s joint investigation findings will expand the pool of Corinthian students eligible for streamlined student loan relief options, helping them rebuild their lives and pursue a brighter future.”
The investigation revealed that the colleges were grossly overstating their job placement rates to entice students to enroll. For example, in one business class in the Everest system, they were claiming that the job placement rate after school was 95 percent, when in reality the rate was just 14 percent.
By extending the student loan forgiveness to the Wyotech and Everest students, as many as an additional 85,000 borrowers could receive federal loan help.
“Our goal is to ensure that every eligible student receives every penny of the debt relief that they’re entitled to,” said Deputy Education Secretary John B. King Jr.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.