MAINT STREET: Debt Collective Wants Out of Federal Student Loans Borrowed to Attend Corinthian Colleges

Career College Central Summary:

  • As the calendar turned from February to March, higher education observers have watched for movement in the showdown between the Department of Education (ED), which manages federal student loans, and students at a failing for-profit college who want their loans to be forgiven.
  • Student and consumer advocates are behind a group of 15 Corinthian College students who refuse to pay back their federal loans. But U.S. Senators and now the Justice Department have apparently aligned with them also. If ED digs in its heels, it risks being made to look like an apologist for a school whose programs have been condemned by the Consumer Financial Protection Bureau.
  • As part of the deal for Corinthian to sell half its 108 campuses to Zenith Group, a new non-profit career college chain owned by student loan debt collector ECMC Group, the Consumer Financial Protection Bureau won a $480 write off of the proprietary Genesis loans made by Corinthian to its students, worth $480 million.
  • CFPB director Richard Cordray said that it “was a tremendously successful result for many thousands of young people and their families that had been seriously harmed by Corinthian’s deceptive marketing.”
  • But the $480 million just covers the Genesis loans—not the federal loans Corinthian students borrowed from ED. Students and their advocates claim that since Corinthian was the purveyor of nearly worthless credentials, these loans should be written off as well.
  • Last spring an organization called the Rolling Jubilee Debt Collective, which grew out of the Occupy Wall Street movement of 2011, began buying up Corinthian debt from debt collectors at huge discounts—and retiring the debt. Since then it has organized the Corinthian debt strike.

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