Feds to Forgive Loans of Scammed Students

Corinthian debt relief could cost $3.6B
By Rob Quinn,  Newser Staff
Posted Jun 9, 2015 1:21 AM CDT
Feds to Forgive Loans of Scammed Students
Former and current college students calling themselves the "Corinthian 100" say they're on a debt strike and refuse to pay back their student loans.   (AP Photo/Manuel Balce Ceneta)

In what Education Secretary Arne Duncan says is "our first major action on this but obviously it won't be the last," an expanded—and expensive—debt relief plan has been approved for former Corinthian Colleges students. Some 16,000 were affected when the for-profit company closed its remaining campuses in April, but the federal plan will forgive loans for tens of thousands of other students who attended Corinthian schools since 2010 at a potential cost of up to $3.6 billion, the AP reports. Corinthian is accused of fraud, including inflating job-placement rates, and Duncan says he sympathizes with students who were left with huge debts and worthless degrees, the New York Times reports.

"You'd have to be made of stone not to feel for these students," Duncan told reporters yesterday. "Some of these schools have brought the ethics of payday lending into higher education." The department has released a guide to options for Corinthian students and says the procedures it's putting in place will help other victims of "abusive for-profit colleges." The plan has its critics: "Students have been hurt, but the department is establishing a precedent that puts taxpayers on the hook for what a college may have done," says Sen. Lamar Alexander, per the Times. "If your car is a lemon you don't sue the bank that made the auto loan; you sue the company," the Republican says. (There's more than $1.2 trillion in US student debt, and this writer says it's time to default.)

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