Feds make it easier for Corinthian Colleges students to erase debt

WASHINGTON – The federal government will make it easier for more students who attended the now-defunct Corinthian Colleges to get rid of their federal loans, officials announced Monday, as part of a new plan that could cost as much as $3.6 billion.

Corinthian Colleges was one of the largest chains of for-profit colleges when it nearly collapsed last year and became a symbol of fraud in the world of higher education and student loans. According to investigators, Corinthian schools charged exorbitant fees, lied about job prospects for their graduates and, in some cases, encouraged students to lie about their circumstances to get more federal aid.

In a plan orchestrated by the Department of Education, some of the Corinthian schools closed while others were sold before the chain filed for bankruptcy protection this spring. The biggest question has been what should happen to the debt incurred by students whose schools were sold. The law already provides for debt relief for students of schools that close, so long as they apply within 120 days.

The latest plan expands debt relief to students who attended a now-closed school as far back as a year ago. And it streamlines the process for students whose schools were sold but believe they were victims of fraud. The Education Department will soon appoint a “special master” to oversee much of the program, and support students at other for-profit schools who feel they’ve been victimized.

“We will make this process as easy as possible for them, including by considering claims in groups wherever possible, and hold institutions accountable,” Education Secretary Arne Duncan said in a statement.