The US Government Is Forgiving $544 Million In Student Debt From Bankrupt Corinthian Colleges

Corinthian College US Federal Loan Forgiveness

The US Department of Education revealed on Monday that it would forgive $544 million in student loan debt from the now-bankrupt for-profit chain Corinthian Colleges.

During a press conference, Secretary of Education Arne Duncan also said the department is going to create a plan that will forgive the debt for students who were defrauded by the chain of useless schools.

Lewin says “the government has never before opened debt relief to such a potentially large pool of students.”

Corinthian Colleges shut down all of its remaining 28 ground campuses on Monday, April 27, leaving 16,000 students with no classes and a lack of support. The shutdown arrived two weeks after the US Government said it was fining the university $30 million for misrepresentation.

Under the plan students who attended Corinthian Colleges throughout the United States and left on or after June 20 last year, will receive a closed-school discharge of their federal student loans.

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Santa Ana, California-based Corinthian, which had operated the Heald College, Everest and WyoTech schools and offered degrees in healthcare and trades, filed for bankruptcy on May 4. The for-profit school chain filed for Chapter 11 with $143 million in debt and about $19 million in assets.

In late 2014 Corinthian sold more than 50% of its campuses to nonprofit education provider ECMC Group Inc. The company kept 13 of its campuses open until April 26, 2015.

The college-based company was fined $30 million after it misrepresented its job placement rates to students in its Heald College system. The government fine also said Heald College would no longer be allowed to enroll students.

The program at one time employed 10,000 workers and operated more than 100 campuses with 74,000 students.

 

Written by Peter Mondrose

Peter Mondrose

Peter Mondrose is the Editor-In-Chief at BusinessPundit. He received his degree in Economics in 1998 and a second degree in Journalism in 2004. He has served as a financial adviser, market trader, and freelance journalist for the last 11 years. When he's not investigating market conditions and reporting on workplace news, he can be found traveling with his wife, dog, and laptop. He can be reached at PeterMondrose@BusinessPundit.com or (929) 265-0240.