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.

Mead Gruver/AP/File
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.

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.”

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.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to