U.S. Department of Education Announces Debt Relief for Corinthian Students

The U.S. Department of Education announced debt relief options on June 8, 2015, for students who attended colleges owned by Corinthian Colleges Inc. There are two debt relief programs, one for students whose schools closed and one for students who were the victims of fraud.

Students whose Corinthian schools closed will be eligible for a closed-school discharge. Normally, the closed school discharge is available to borrowers who were attending the school when it closed or who withdrew from the school within 120 days of the closure. The U.S. Department of Education has extended eligibility for the closed school discharge back to June 20, 2014, the date Corinthian entered into an agreement with the U.S. Department of Education to close or sell its schools. Students will need to apply for a closed-school discharge. Students who are able to transfer their credits and complete their education elsewhere are not eligible for a closed-school discharge.

Other borrowers will be addressed under the “defense to repayment” clause, if they can demonstrate that they were defrauded under state law. To streamline the process, the U.S. Department of Education will rely on evidence of fraud from federal and state agencies and waive the requirement that affected students individually prove that the college’s actions or omissions concerning the borrower’s federal loans or the provision of educational services paid for by the borrower’s federal loans violated state law. For more information and forms to apply for debt cancellation, Corinthian borrowers can visit www.studentaid.gov/Corinthian or call 1-855-279-6207.

The defense-to-repayment will also apply to borrowers at other colleges, including public, private non-profit and for-profit colleges. The U.S. Department of Education will appoint a Special Master to develop a process for addressing defense-to-repayment claims involving students at other colleges. The U.S. Department of Education will also draft new regulations for loan cancellation under the defense-to-repayment provisions. 

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