Loan Forgiveness for Corinthian: The Brass Tacks

Education is an investment that never loses value and keeps on bringing dividends. Some say that you can’t put a price on it – and they’re correct. You can’t put a price on knowledge, but as student debt in the United States shows, you can put a price tag on the tools for learning. With the average student debt reaching $30,000 (with particularly unlucky students accruing close to $75,000 in debt), according to a 2014 study, dealing with the debt becomes a priority for young adults beginning life on their own with shackles around their ankles. It is more than just a figure of speech. In April, the total sum of money owed by graduates nationwide topped $1.2 trillion – twice the size of the defense budget of the United States in 2013.

Dealing with Debt: The Old Methods and the New

As such, it comes as no surprise that President Obama’s administration has been pushing for loan forgiveness options to some success. One of the most beneficial changes was the introduction of loan forgiveness after making 240 consecutive monthly payments, as well as the option to repay the loans in a Pay As You Earn (PAYE) plan. The current goal of the administration is to open the PAYE repayment plan to everyone by December 2015. This would give every graduate the ability to make payments capped at 10 percent of their discretionary income, slashing their financial obligation by at least one third, from 15 percent.

Loan Forgiveness For Corinthian and Student Debt

More important is the recent approval of a series of loan forgiveness measures aimed at relieving the burden of students who were enrolled at colleges that were owned by Corinthian Colleges, Inc. This is a reaction to the recent declaration of bankruptcy by the chain, after an extended investigation revealed fraud, deceptive recruitment, and predatory practices.

The administration has prepared a program intended to allow students who attended Corinthian-owned schools to discharge their debt. While under normal circumstances, students are eligible for discharging their loans if they were studying at a given school or withdrew from it within 120 days of its closing, the new program extends the window all the way back to June 20, 2014. In effect, this will allow up to 350,000 Corinthian students to apply for debt relief. The total sum of their loans? As much as $3.6 billion.

Considerations

This would make the new program the largest yet. However, the precise estimates are difficult to make, as it depends on the number of claims that are actually put forward and how many of them are successful. The total benefit to graduates may be bigger still, as while ostensibly aimed at Corinthian students who are now left out in the rain, the program is intended to spearhead efforts into combating predatory for-profit colleges and allow students to discharge their loans on the same basis as with Corinthian: If they prove that their loans were taken out as a result of illegal behavior on the part of the college.

If you’re a Corinthian student seeking debt relief you have a friend in Van Horn Law Group. We are here to help.