Students attending for-profit Corinthian Colleges that were closed in April can have loans forgiven and what they have paid reimbursed if they left the school after June 20, 2014, says the Department of Education.
The move would allow thousands of students who attended the institutions run by Corinthian Colleges (Heald, Everest and WyoTech), which filed for bankruptcy in May after charges of fraud, to have their federal loans forgiven, according to The New York Times
Secretary of Education Arne Duncan said at a news conference that the department plans to eventually create procedures for any student to have their loans forgiven if their college defrauded them.
Some estimated 350,000 students received loans to attend courses at Corinthian Colleges totaling as much as $3.5 billion, said the education department.
"You'd have to be made of stone not to feel for these students," said Duncan. "Some of these schools have brought the ethics of payday lending into higher education. This is our first major action on this but obviously it won’t be the last."
"We will make this process as easy as possible for them, including by considering claims in groups wherever possible, and hold institutions accountable," said Duncan.
Education Undersecretary Ted Mitchell said on the department's website
that Corinthian College students can find additional information on getting their debt relieved through the education department's federal student aid site.
"It is impossible not to be moved by the stories of students whose futures were damaged by the institutions they once believed were setting them on a path to a better life," said Mitchell. "These processes will offer them real and badly needed help. Loan forgiveness can’t give students back the time they invested at Corinthian. But it will help them make a fresh start."
Mitchell said a special master will be appointed to oversee "borrower defense issues." He said the special master will make sure debt relief process is "clear and fair" and will remain simple and streamlined.
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