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.
Under Thursday's agreement, the Department of Education will suspend judicial debt collection efforts for 120 days against former Corinthian students who are in default, according to Scott Gautier, a lawyer for an official committee of students in the Corinthian bankruptcy.
Read more at Reuters: http://www.reuters.com/article/2015/07/09/us-corinthian-de-bankrutpcy-students-idUSKCN0PJ2UF20150709