Stu­dent debt re­lief ex­pands

U.S. agency un­veils as­sis­tance for those af­fected by col­lapse of Corinthian Col­leges.

Los Angeles Times - - BUSINESS - By Chris Kirkham and Sa­man­tha Ma­sunaga chris.kirkham@la­times.com sa­man­tha.ma­sunaga@la­times.com

U.S. agency un­veils more as­sis­tance for those af­fected by the col­lapse of Corinthian Col­leges.

The U.S. Depart­ment of Ed­u­ca­tion on Mon­day an­nounced a se­ries of debt re­lief mea­sures that could as­sist tens of thou­sands of stu­dents af­fected by the col­lapse of Santa Ana-based Corinthian Col­leges Inc.

The pro­vi­sions could al­low many more stu­dents to wipe out fed­eral loan debt tied to the for-profit col­lege chain, but ques­tions re­main about how many stu­dents will ap­ply — and how many will be ap­proved.

Un­til now, only about 16,000 stu­dents — those that at­tended schools that sud­denly closed in April — have been el­i­gi­ble for debt for­give­ness. The new pol­icy al­lows other stu­dents to seek debt for­give­ness if they be­lieve that they were vic­tims of fraud­u­lent mar­ket­ing and re­cruit­ing prac­tices.

The Ed­u­ca­tion Depart­ment also ex­tended loan for­give­ness to stu­dents whose schools even­tu­ally closed, as long as they with­drew af­ter June 20, 2014 — the day that Corinthian an­nounced the depart­ment had re­stricted its ac­cess to fed­eral aid.

Corinthian’s col­lapse came af­ter years of fed­eral and state in­ves­ti­ga­tions into al­leged fal­si­fi­ca­tion of stu­dent job-place­ment rates and mis­lead­ing mar­ket­ing cam­paigns. The Ed­u­ca­tion Depart­ment called Corinthian’s clo­sure in April “the largest col­lege shut­down in Amer­i­can his­tory.”

Ed­u­ca­tion Depart­ment of­fi­cials said the goal was to bal­ance the in­ter­ests of stu­dents and tax­pay­ers. To get a sense of the fed­eral gov­ern­ment’s in­vest­ment in Corinthian, con­sider this: Since 2010, the com­pany en­rolled nearly 350,000 stu­dents who took out fed­eral loans worth about $3.5 bil­lion.

In a con­fer­ence call with re­porters Mon­day, Ed­u­ca­tion Sec­re­tary Arne Dun­can said any es­ti­mates of tax­payer ex­po­sure would be spec­u­la­tive at this point.

“We re­ally don’t know how many stu­dents will ap­ply for this,” Dun­can said.

Law­mak­ers, state at­tor­neys gen­eral and stu­dent ac­tivists have been push­ing since last sum­mer for a pro­vi­sion al­low­ing loan for­give­ness in cases of fraud. The Ed­u­ca­tion Depart­ment said it would ap­point a “spe­cial mas­ter” to over­see the sys­tem

For­mer Corinthian stu­dents who ap­ply can stop pay­ing their loans un­til the depart­ment re­solves their claim. Stu­dents must show the school vi­o­lated state law to have their loans for­given.

Be­cause po­ten­tially hun­dreds of thou­sands of for­mer stu­dents could ap­ply for such for­give­ness, the Ed­u­ca­tion Depart­ment said it would work to group as many stu­dents to­gether as pos­si­ble if they at­tended pro­grams found to be in vi­o­la­tion.

For ex­am­ple, Ed­u­ca­tion Depart­ment of­fi­cials found that the vast ma­jor­ity of stu­dents who at­tended Corinthian’s Heald Col­lege sys­tem be­tween 2010 and 2015 would be el­i­gi­ble for fed­eral loan dis­charges be­cause of mis­lead­ing job-place­ment num­bers. In April, the Ed­u­ca­tion Depart­ment levied a $30-mil­lion fine on Heald, al-. leg­ing that the col­lege mis­stated job-place­ment rates in more than 80% of its pro­grams.

The depart­ment es­ti­mated that as many as 40,000 for­mer Heald stu­dents could have up to $544 mil­lion in fed­eral loans erased. Stu­dents can find more in­for­ma­tion at stu­den­taid.gov/Corinthian.

Dun­can said he would de­mand ac­count­abil­ity from for-profit col­leges such as Corinthian be­cause of the risks to stu­dents and tax­pay­ers. “If you de­fraud stu­dents,” he said, “we’ll make sure the full weight of the law is brought to bear.”

Al Seib Los An­ge­les Times

STU­DENTS Rosa En­riquez, left, and Ir­landa Ibarra are turned away at Ever­est Col­lege in Al­ham­bra, part of the Corinthian Col­leges chain that closed in April.

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