U.S. to halt legal steps vs Corinthian student loan defaults

In the wake of the Corinthian scandal, Department of Education says it won't come after students who default on those loans.

News Story (Arizona, California, Hawaii, New York, Oregon)

Tom Hals
Reuters News Service
July 9, 2015
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Tags: Consumer Protection, Loan Forgiveness, Student Debt


The U.S. government has agreed to take no near-term legal action against 40,000 former students of the bankrupt Corinthian Colleges Inc who have defaulted on federal loans, according to a lawyer representing students.

Corinthian abruptly closed its remaining 28 schools in April and left 16,000 students without classes, becoming the largest failure in for-profit higher education. The company operated more than 120 campuses at its peak.

The company filed for bankruptcy in May and soon after the U.S. Department of Education announced a plan under which tens of thousands of former Corinthian students could seek relief from their federal student loans. However, a lawyer for the government told a court hearing on June 30 that fewer than 5,000 students had applied.