Posted: Daniela Young | December 14, 2015

News

Many ex-Corinthian students may not be granted debt relief

Late last year the Obama Administration and the U.S. Department of Education implemented a rule to protect students by regulating career colleges, holding them accountable to their claims of putting students on the path to success. The largest of these establishments are the former Corinthian Colleges where tens of thousands of students were lured into programs under fraudulent marketing tactics and encouraged to take out hefty student loans with the promise of landing a position in their career of choice after graduation. Sadly, this was not the case for many of the students and several of them are still awaiting debt relief or forgiveness promised by the Department of Education, yet technicalities may have borrowers with the Family Federal Education Loan Program (FFEL) waiting longer than anticipated.

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An expanded debt relief process, laid out mid-2015, allowed borrowers to file a cease collections claim while waiting for the Department of Education to determine which loan types qualify for forgiveness or some type of relief; however, because FFEL loans were discontinued in 2010 these borrowers are currently ineligible for relief as many are now held by Navient, a federally backed student loan servicing company.

While students who attended a school by the Corinthian chain have been granted the option to file forbearance and stopped collections on defaulted accounts, it remains uncertain when discharge will be granted - or, if it will be granted at all.

MarketWatch illustrates how students who attended these now debunked schools are unable to land positions since graduation and have now found themselves buried under student debt, while fighting to live hand-to-mouth due to wage garnishment.

Borrowers holding Direct Loans will be guaranteed forgiveness; unfortunately, those with FFEL loans will remain in default or forbearance until the Department of Education determines whether or not those with these loan types are qualifying candidates.

Department officials made statements claiming, "We are in the process of reviewing what the options are for FFEL borrowers and will have more to say when we've completed that review." Jason Glick, a staff attorney in the special litigation unit at the New York Legal Assistance Program Group, counteracted the statement saying the department is "taking advantage of the complicated structure of the FFEL program."

In the meantime, former Corinthian school borrowers with FFEL loans must remain patient while continuing to repay student loans.

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Written by Daniela Young

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