Some Corinthian College Student Borrowers Just Had Their Loans Forgiven
Pictured above is Sec. DeVos, head of the Department of Education, speaking at the CPAC 2017.
The 12,900 students who were defrauded by Corinthian Colleges won’t have to pay back their student loans; the U.S. Education Department announced earlier this month that it would discharge the loans for these defrauded students. However, by announcing that future debt for some students is still in question, the Department of Education has been met with a firestorm of disapproval.
The Corinthian College chain folded in on itself during 2015 after it was investigated because of how few of its students were able to find relevant jobs after earning their degrees. The investigation sparked much criticism of for-profit colleges and their recruiting practices.
What the New Presidential Administration Meant for Corinthian Debt Forgiveness
When President Donald Trump assumed office in January, loan forgiveness for prior Corinthian students was halted. While a over ten thousands students just qualified for loan forgiveness, a solid number of 8,600 applications for debt relief were rejected alongside the accepted applications. No further information was given for the rejections.
This showcases the fears of no more forgiveness under the current administration. After all, Corinthian College students aren’t the only ones who applied for relief from their student loans. Other students from for-profit schools are trying to bank on potential forgiveness, awaiting any positive news.
In fact, more information was provided last month by the Education Department about how upcoming loan discharges will be handled for Corinthian students. Applicants can now expect a tiered relief system which is based upon the average salary of starting positions in their industry major.
Those who are now earning less than half of what their peers do will be the ones to walk away with complete forgiveness relief. Those who bring home a bigger paycheck than that will only be entitled to some relief – not full forgiveness.
If the decision-making process takes the department more than a year to make, applicants will get credit for the interest that stacks up on their accounts.
The announcements for the new tiered system for relief was followed by harsh criticism. Four states sued the department, alleging the department had skirted the law. The lawsuits are aimed at receiving relief for students who have been waiting for some sort of debt forgiveness.
The History of the Corinthian Debt Forgiveness
President Barack Obama’s administration began the debt forgiveness program for students of Corinthian Colleges in 2016. The forgiveness program covered certain students who attended any schools tied to the Corinthian chain, such as Everest College, Heald College, and Wyoming Technical Institute.
Students who were eligible for relief included the ones who were currently attending a Corinthian-affiliated school when it closed in 2015. If a student was granted a closed school discharge, they were eligible to be given a full discharge of federal student loans. They could also have received money back from payments they’d already made on those loans.
Those who thought they were cheated by the school they went to were also eligible to apply for forgiveness or debt relief, even if the school didn’t close.
image copyright Gage Skidmore