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AFR Statement: Education Department Must Do More for Former Corinthian Students

Submitted by on December 3, 2015 – 6:11 pm

FOR IMMEDIATE RELEASE: Dec. 3, 2015

CONTACT: Alexis Goldstein, Americans for Financial Reform
alexis@ourfinancialsecurity.org / 202-973-8005

We welcome the news in the latest report by the Borrower Defense Special Master Joseph A. Smith that 1,312 former students of Heald College – part of predatory for-profit chain Corinthian Colleges Inc – will finally see the debt cancellation they have long been promised. But we remain gravely concerned by the Department’s unjustifiably narrow approach to debt cancellation, which if it continues unchanged may leave hundreds of thousands of students burdened with debts foisted on them by deceptive and abusive practices.

The misrepresentations that the Department found at Heald, and that the Attorney General of California found at campuses in the state and online were endemic throughout the entire Corinthian chain. In providing debt cancellation only to 1,312 Heald students who affirmatively applied, the Department leaves out not only the vast majority of the Heald students it previously stated were eligible, but also the students of Everest and Wyotech campuses who were similarly victimized.

From the Consumer Financial Protection Bureau’s victory in its lawsuit against Corinthian, to the Department’s findings at Heald, to the misrepresentations they documented at Everest Decatur, Everest Cross Lanes and Everest Eagan, to the multiple state Attorney Generals lawsuits and investigations, the Department has the evidence it needs to discharge the debt of all Corinthian students. We join with the advocates, lawmakers, and law enforcement officials who have all called on the Department use its legal authority to discharge these debts now, without an individual application.

We also note that to the extent that relief is only being provided to students who apply individually, the Department’s outreach has been vastly insufficient. The Department previously sent 54,170 emails to Heald students, letting them know their options for discharge, yet only 3,356 have applied and many harmed students have not received any information about relief options. Instead of this limited, one-time notification, the Department should be pursuing a much more comprehensive, multi-pronged outreach strategy in order to ensure that all students victimized by Corinthian are aware of their legal right to pursue debt cancellation. Without sufficient outreach to all affected borrowers, today’s news will only leave the students not granted relief confused as to when and if the relief promised to them will come.

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