The unprecedented collapse and now bankruptcy of Corinthian Colleges has left in its wake a large political battleover student debt relief. At the center of the storm is the U.S. Department of Education, which is now deciding how to structure a debt relief process. Its decisions are likely to have long-term implications for student loan borrowers regardless of whether they attended Corinthian institutions.
Here's an explanation of some of the moving parts to Education Department debt relief.
Corinthian declared bankruptcy on Monday. Will that affect debt relief for students?
The Education Department’s decision making about loan forgiveness for Corinthian students will not change because of Corinthian's bankruptcy, a department official said.
Federal regulators earlier this year negotiated $480 million of loan forgiveness for students who took out private loans to attend Corinthian campuses. The bankruptcy won't affect relief because it was not funded by Corinthian. Instead it's being provided by the ECMC Group under an agreement with the Consumer Financial Protection Bureau. ECMC purchased53 Corinthian campuses earlier this year.
What about the department's nearly $30 million fineagainst Corinthian?
"We will do everything we can to make our claim to the $30 million," a department official said.
Corinthian's bankruptcy filing, which shows $19.2 million in total assets and $143.1 million in debt, names the Education Department as one of the company's 30 largest creditors, though it lists an "unknown" amount owed.
Corinthian on Tuesday formally appealed the fine. The company says the department unfairly rushed to judgment and lacked proper justification for its findings that Corinthian misrepresented job placement rates.
Read more at Inside Higher Ed: https://www.insidehighered.com/news/2015/05/06/us-charts-new-debt-relief-process-implications-beyond-corinthian