This week, 14 former Corinthian Colleges students met with the Department of Education, the Consumer Financial Protection Bureau, and the Department of Treasury. Echoing the allegations of many state and federal government agencies, they described how Corinthian induced them to take out thousands of dollars in student loans by making false promises of a first-rate education and high-paying jobs upon graduation.
At great risk to their own financial well-being, these students have brought attention to the unjust circumstances of thousands of former Corinthian students. They enrolled based on false assurances that a Corinthian education would lead to better lives for themselves and their families. Although these students worked hard for credentials they later discovered were worthless, the Department continues to mercilessly pursue them for repayment of their student loans. At the same time, the Department has allowed Corinthian, which defrauded taxpayers and students, “to get out of its financial obligations.” Low-income students are essentially being forced to pay for Corinthian’s legal violations and the Department’s failure to enforce the law.
Although the group delivered 257 Corinthian students’ applications for debt relief to the Department, it called on the Department to grant automatic and widespread debt cancellations, rather than requiring each individual student to prepare and submit his/her own application. We have previously urged the Departmentto do this and strongly support this request. The Department has clear authority to automatically cancel the debts of large classes of students who were subjected to deceptive practices under a number of provisions including:
- Defense to Repayment: Under provisions of federal loan promissory notes and regulations, the Department is obligated to grant loan relief when a student provides evidence that the school has violated a state or federal law.
- Compromise or Settlement: The Department may also cancel harmed students’ loans pursuant to its broad discretion to compromise and settle claims under the Higher Education Act and the Federal Claims Collection Act.
- Loan Discharges: The Higher Education Act also obligates the Department to cancel student loans when a school closes or has falsely certified a student’s eligibility for financial aid.
At the meeting, the Department agreed to consider the Corinthian students’ request. We hope the Department will take this opportunity to finally provide widespread relief to Corinthian students. For Corinthian students, we urge the Department to:
- Immediately cease collection of all Corinthian students’ loans.
- Work with state attorneys general, accreditors, and other federal agencies to identify groups of current and past Corinthian students who will receive automatic and full loan cancellations, including refunds of amounts already paid.
- Set up a streamlined process through which other Corinthian students may seek loan cancellation, for example by sending all students simple forms and granting full cancellations to students who state they were misled by Corinthian.
With respect to students from other schools, we also urge the Department to set up a process to grant class-wide loan cancellations whenever the Department, state attorneys general or other government agencies determine that a school has committed systemic legal violations. It should also develop a simple and non-burdensome process through which students who were deceived may seek debt relief.
