Friday, 02 December 2022

Borrowers defrauded by Corinthian Colleges will receive $5.8 billion in student loan debt relief

California Attorney General Rob Bonta on Wednesday celebrated the Department of Education’s decision to grant federal student loan debt relief to 560,000 borrowers who attended Corinthian Colleges, a now-defunct for-profit college that operated dozens of campuses across California.

The decision is the culmination of a decade-long legal battle by the California Department of Justice to hold Corinthian Colleges accountable for its predatory conduct and to compel the Department of Education to process debt relief claims submitted by students who took out federal student loans to attend Corinthian Colleges.

“Today’s announcement is life changing for the tens of thousands of borrowers who have long paid the price for Corinthian Colleges' lies and deception,” said Attorney General Bonta on Wednesday. “For these borrowers, whose only mistake was trusting Corinthian Colleges with their higher education dreams, debt relief has been hard fought and long overdue. Today's announcement is the final chapter in a legal battle that has spanned nearly a decade and three attorneys general. I applaud the Department of Education for finally making good on its promise to provide debt relief to these defrauded borrowers.”

The California Attorney General’s Office led the charge against for-profit Corinthian Colleges and its subsidiaries, which operated schools under the Heald, Everest and Wyotech brand names, nearly a decade ago, seeking to put an end to abusive practices that left students under a mountain of debt and far too often without the jobs Corinthian had falsely promised its degrees would provide.

Corinthian specifically targeted low-income, vulnerable students through false advertisements that misrepresented job placement rates and the value of its educational programs. Corinthian illegally used the seals of the armed forces in its advertisements to recruit veterans. It also engaged in illegal debt collection practices.

The California Attorney General's Office ultimately obtained a $1.1 billion judgment against Corinthian for its misconduct.

Following this judgment, the California Attorney General's Office was instrumental in moving the Department of Education to implement a borrower-defense process to grant widespread, expedited loan relief to defrauded Corinthian borrowers.

Based on a joint investigation with the California Attorney General's Office, the Department of Education under President Obama announced that tens of thousands of former Corinthian students were entitled to federal student loan relief. However, immediately following the change in presidential administration, the Department of Education halted processing these claims, leaving more than 50,000 applications pending.

The announcement addresses ongoing litigation filed by the California Attorney General’s Office against the Department of Education in 2017 for withholding promised loan relief to defrauded Corinthian students.

That lawsuit was supported by the California Community Colleges, which lent critical assistance in establishing the concrete harm that the Department of Education’s misconduct caused California’s students and public institutions.

The lawsuit also received crucial support from the Legal Aid Foundation of Los Angeles, the East Bay Community Law Center, and the Project on Predatory Student Lending at Harvard Law School.

The announcement will provide nearly 93,000 Californians with an estimated $960 million in federal student loan debt relief. Eligible borrowers will receive relief regardless of whether they have filed a borrower defense application.

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