U.S. To Forgive Corinthian Student Loans

(RTTNews) - The U.S. Department of Education has forgiven federal loans provided to tens of thousands of students enrolled at for-profit college Corinthian Colleges, Inc. (COCO)

The school filed for Chapter 11 bankruptcy in early May amid charges of fraud.

The new debt relief process was announced for students at Corinthian Colleges, which operated schools under the names Everest, Heald, and Wyotech.

There are also many other career colleges in the U.S., operated by for-profit companies, that have left students with lots of debt and few job prospects, putting both students and taxpayers at risk.

"While some for-profit career colleges play a critical role in helping students succeed in their educational and training pursuits, too often, bad actors in the sector have preyed on some of our nation's most vulnerable students and taken advantage of hard-working Americans who simply want a better future for themselves and their families," said U.S. Secretary of Education Arne Duncan.

On April 26, Corinthian Colleges ceased substantially all operations and discontinued instruction at its remaining 30 ground campuses, adding that it was working with other schools to provide continuing educational opportunities for its students.

Corinthian said those efforts depend to a great degree on cooperation with partnering institutions and regulatory authorities.

Corinthian also signed an operating agreement with the U.S. Department of Education that established an orderly transition plan for its 107 campuses and online programs, and allowed its students to complete their educational programs.

The plan to forgive student loans could cost the federal government about $3.6 billion, which is the amount given to students since 2010.

The federal government is appointing a "special master" to help create a straightforward process for debt relief and implement steps to reduce the burden on borrowers.

Duncan has directed a team to ensure that students who have been defrauded by their college, or because their school closed down, receive every penny of the debt relief they are entitled to, as efficiently and easily as possible.

The department is reaching out to the affected students and providing clear information and loan discharge applications.

The students are eligible to discharge their federal student loans if they were attending when the school closed or who withdrew from the school within 120 days of the closing date.

Given the unique circumstances for former Corinthian students, the department is expanding eligibility for students to apply for a closed school loan discharge, extending the window of time back to June 20, 2014.

The Department's Federal Student Aid office has been and will continue to contact potentially impacted student borrowers to provide clear information about their options, including loan discharge applications.