Subscribe

Corinthian Colleges students get $480 million in debt relief

Students and former students of Corinthian Colleges were harmed by the chain's predatory student loan program, the US Department of Education announced Tuesday. Corinthian had more than 100 campuses under the names Everest, Heald, and WyoTech. It also offered degrees online.

  • close
    Larry Wostenberg teaches an engine management systems class at the WyoTech technical school campus in Laramie, Wyo. in 2009. Students and former students at for-profit college chain Corinthian Colleges will receive $480 million in debt relief, the Department of Education announced Tuesday.
    Mead Gruver/AP/File
    View Caption
  • About video ads
    View Caption
of

Students and former students of Corinthian Colleges, one of the largest for-profit higher-education chains in North America, will be getting $480 million worth of debt relief after the troubled schools were bought out by another company.

The federal Consumer Financial Protection Bureau and the U.S. Department of Education announced the refunds Tuesday, saying students were harmed by the chain’s high-price student loan program — so-called Genesis loans.

“Today’s action will provide substantial relief to current and past students who were harmed by Corinthian’s predatory lending scheme,” CFPB director Richard Cordray said in a news release. “These consumers were lured into high-cost loans destined to default, and then targeted with aggressive debt collection tactics. We will be vigilant to ensure that consumers receive this important relief and that others are protected in the for-profit college industry.”

Recommended: Student loans: Top 10 states with the highest debt levels

Corinthian had more than 100 campuses in the United States and Canada under the names Everest, Heald and WyoTech. It also offered degrees online.

The bureau sued Corinthian Colleges last year, accusing it of luring tens of thousands of students into taking out loans with false promises of job prospects and career services. The bureau alleged that the schools also used illegal collection tactics to pressure students to pay back the loans — even while they were still in school.

Interest rates on the Genesis loans were more than twice those of more competitive student loans and more than 60% of students defaulted on the loans before they completed their studies, according to the release.

That lawsuit is ongoing.

The Education Credit Management Corporation bought out many of the Corinthian schools and is running them under its nonprofit wing. Under a deal struck with the government, ECMC will not operate a private student loan program for at least seven years and has agreed to a set of new consumer protections.

“Today, we begin delivering on our promise to transform the Everest and WyoTech schools we have acquired into first-rate career colleges where success is measured not by how many students we enroll, but by how many students complete their programs and get fulfilling jobs when they graduate,” David Hawn, president and CEO of ECMC Group, said in a Tuesday news release.

Under ECMC’s deal with the government, students with loan debt will immediately receive a 40% reduction in how much they owe. Eligible students will be notified and will get the reduction automatically.

The group also agreed to stop aggressive tactics used by Corinthian to collect on student debt, including the threat of lawsuits, and work to clear the credit reports of students who have been harmed by predatory loans from Corinthian.

NerdWallet offers tips to help people in debt pay off loans.

The Christian Science Monitor has assembled a diverse group of the best personal finance bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link in the blog description box above.

About these ads
Sponsored Content by LockerDome
 
 
Make a Difference
Inspired? Here are some ways to make a difference on this issue.
FREE Newsletters
Get the Monitor stories you care about delivered to your inbox.
 

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK