Summary: Students of the former Corinthian Colleges Inc. will be given a break from legal collection actions on their defaulted student loans.
Corinthian Colleges Inc., a for-profit higher education system, had operated over 120 different college campuses at one time. Last April they closed their remaining 28 campuses, leaving 16,000 students stranded. The school filed for bankruptcy in May.
Read this article about rules that for-profit schools need to be following.
There are an estimated 40,000 former students of the company that have defaulted on their federal loans. The U.S. government will not take legal action on the near-term loans. Soon after Corinthian filed for bankruptcy, the U.S. Department of Education set up a plan for the thousands of affected students to seek relief from their federal loans. Very few students, fewer than 5,000, actually took advantage of this opportunity and applied for the help.
The agreement Thursday will stop legal collection efforts for 120 days against any former Corinthian students in default of their loans. The attorney representing students, Scott Gautier, hopes to be able to use the 120 days to negotiate debt relief plans for the students. The students want the company to be responsible for the loans.
Corinthian was fined $30 million by the Department of Education for misconduct including misrepresenting job placement rates. Other lawsuits that the company is facing besides from the former students include a lawsuit from the California attorney general. The attorney general claims the company used predatory advertising and other issues.
Source: http://www.reuters.com/article/2015/07/09/corinthian-de-bankrutpcy-students-idUSL1N0ZP2DN20150709
Photo: kcra.com