Obama To Cancel Student Loan Debts Owed By Defrauded Everest College Students
Beginning this month, the Obama administration will forgive nearly $28 million in federal student loans for 1,312 former Corinthian Colleges students who say the defunct for-profit chain violated their rights.
Corinthian, which once operated more than 120 schools with more than 110,000 students across North America under the Everest, Wyotech and Heald brands, filed for bankruptcy in May in the largest failure of a college chain in U.S. history.
Marketing material found shows the school set its sights on “isolated, impatient people with low self-esteem and few people in their lives who care about them, and who are stuck and unable to see and plan well for their future.” The for-profit targeted single mothers, veterans and low-income people with promises of jobs that it failed to deliver.
It is still unclear how much it will ultimately cost to forgive the debt of all eligible borrowers. Corinthian students have borrowed about $3.2 billion in federal loans since 2010.
A petition alleged the school used illegal or deceptive tactics in violation of state law to persuade students to borrow.
Anyone granted a discharge will not have to pay federal income taxes on the money or need to file additional forms declaring the amount forgiven, the Treasury Department said Thursday.
In his latest report, Smith said his team of lawyers have resolved 5,814 claims from Corinthian students affected by the school closing. Those resolved cases involved about $75 million in federal student loans. There are 5,379 other defense-to-repayment claims that remain open.
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