The U.S. government and former students of Corinthian Colleges, which closed in April, need to promote the government's loan relief program before asking for a stay on all student debt collections, a U.S. Bankruptcy judge said on Tuesday.
Judge Kevin Carey in Wilmington, Delaware, declined to rule on a request by an official committee of Corinthian students to halt all loan repayments amid allegations the company misrepresented itself to prospective students.
Corinthian Colleges Inc became the largest failure in for-profit higher education when it abruptly closed 28 schools in April and left 16,000 students without classes. Corinthian has been the target of lawsuits and government investigations alleging it defrauded students and acted as a predatory lender.
The company filed for bankruptcy last month 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.
A lawyer for the U.S. government told Carey on Tuesday that while 40,000 Corinthian students are in default on their federal loans, less than 5,000 had applied for the government's debt relief. The attorney, Lloyd Randolph, said the government intended to grant relief to 768 former Corinthian students.
Read more at Reuters: http://www.reuters.com/article/2015/06/30/corinthian-de-bankrutpcy-studentloans-idUSL1N0ZG24N20150630