The U.S. Department of Education has announced federal student loan relief options for many borrowers who attended Corinthian Colleges (including Everest College, Everest Institute, WyoTech and Heald Colleges). You can find general information below, but you also should consider seeking legal assistance. (For California borrowers, the California Attorney General’s website includes specific information about legal services and clinics in your area.) The U.S. Department of Education also posts on-line information for Corinthian borrowers, including updates as they arise as well as responses to Frequently Asked Questions about Corinthian Colleges.
Debt Relief for Borrowers Affected by Campus Closures
A closed school discharge for federal loans is generally available to borrowers who attended a school that closed while they were enrolled or who withdrew within 120 days before the school’s closure. To qualify, borrowers must have been unable to complete the program. The Department has extended eligibility to Corinthian borrowers who withdrew on or after June 20, 2014 from a Corinthian school that closed on April 27, 2015. (The Department may change the 120-day period in other cases as well).
Some borrowers may also qualify for reimbursement of federal and/or private student loans from a state tuition recovery fund.
Federal Debt Relief for Borrowers Not Eligible for Closed School Discharges
Corinthian borrowers who are not eligible for closed school discharges may still be eligible for cancellation of their federal loans through false certification or unpaid refund. There is another type of loan cancellation, called a “defense to repayment (or “borrower defense”) ,” that is available to borrowers whose schools committed fraud or violated state law. For example, if your school lied to you about something important before you enrolled, such as your chances of finding a job after you graduated, you may have grounds to file a defense-to-repayment claim with the Department of Education or other holder of your loans. If your claim is granted, your student loans may be cancelled and you may receive a refund of amounts you already paid.
The Department is announcing information about this process in phases. For now, the Department has provided this information:
- Heald College Borrowers: The Department previously said that it would grant loan cancellations and refunds to borrowers who enrolled on or after July 1, 2010 in a Heald College campus and program during the time frames specified here. Borrowers may file for this relief online or by submitting this application.
- Everest and Wyotech borrowers: On March 25, 2016, the Department announced new information about this relief. The Department has found that between 2010 and 2014, Everest Institute, Everest College, and Everest University (“Everest”), as well as WyoTech, misrepresented job placement rates for many of their programs of study. The Department stated that these findings qualify students enrolled in the covered programs and time periods to apply for a discharge of their federal Direct Loans through an expedited process using a simple attestation form. This includes parents of Everest and WyoTech students with parent PLUS loans.
If you were enrolled in one of the Everest or WyoTech programs listed here on or after the date listed and want to apply for a discharge based on defense to repayment, you must do the following:
- Complete the fillable PDF attestation form, print it, and sign it (view a nonfillable HTML version of the attestation form here). Or, you can complete an online attestation form.
- Send your completed form to the Department of Education by e-mail to FSAOperations@ed.gov or by regular mail to Department of Education, P.O. Box 194407, San Francisco, CA 94119.
The Department says that it will contact you as it processes your claim for loan forgiveness based on borrower defense.
- Other Corinthian Borrowers: The Department has stated that it is creating a “streamlined” process for other Corinthian borrowers with Direct Loans (including borrowers whose programs are not included in the above relief) who believe their schools violated state law and plan on submitting defense-to-repayment claims. It is not clear, however, what process the Department will use. According to a December report from the Office of Inspector General, the Department has not approved any borrower defense applications since January 20, 2017. Since the release of the report, the Department announced a new borrower defense process. Along with the announcement of the new process, the Department stated that it approved for discharge 12,900 pending claims submitted by former Corinthian Colleges, Inc. students, and denied 8,600 pending claims. The Department stated that borrowers will be notified on a rolling basis as their discharge is finalized and that “...the remaining pending claims will be adjudicated systemically under the newly announced discharge process.”
In the meantime, if you have Direct Loans (or a combination of Direct and FFEL Loans), you may apply for borrower defense relief and request that your loan servicer or debt collector grant a forbearance and immediately stop all debt collection, including wage garnishments, Social Security offsets, and tax refund seizures. During this year, you will not be required to make any payments.
It is not clear if servicers are processing these requests. You should not assume that your account is in forbearance or stopped collections. Be sure to check with your servicer. To help avoid an unnecessary tax refund offset, borrowers with defaulted loans may want to confirm that they are in stopped collection status by calling the Default Resolution Group at 1-800-621-3115 before filing their taxes. You should also consider calling the I.R.S. at 1-800-304-3107 to get more information about whether your loan is certified for offset.
ALERT: As of December 2017, the Department states on its web site that if you received an email from a firstname.lastname@example.org email address with the term “Borrower Defense Claim” in the subject line, it is an official U.S. Department of Education (ED) communication that relates to a full or partial approval of your borrower defense to repayment application and that you will receive a subsequent communication from ED or your federal loan servicer regarding when your loan has been discharged. The Department also says that you also will receive further communications if any additional actions are required.
Private Student Loans
Many Corinthian borrowers also received private student loans from their schools, usually called “Genesis” loans. If you received a Genesis loan, you may be covered by a settlement agreement obtained by the Consumer Financial Protection Bureau (the CFPB). This settlement provided the following for covered loans:
- Borrowers will receive a 40% reduction on their principal balances.
- Borrowers will not be sued or threatened with legal action if they fail to repay their Genesis loans.
- All current negative information concerning Genesis loans will be deleted from borrowers’ credit histories. (However, the CFPB warns in the letters it sends that they may provide information to credit reporting bureaus if borrowers fail to make payments).
You should have received a letter in March 2015 if your loan was included in the settlement. If you are not sure, you can find out by asking your current Genesis loan servicer. The servicer is the business that is sending you monthly statements or other letters regarding your Genesis loan. You should have received a letter in March 2015 if your loan was included in the settlement. If you are not sure, you can find out by asking your current Genesis loan servicer. The servicer is the business that is sending you monthly statements or other letters regarding your Genesis loan. If your servicer will not provide this information, you should file a complaint with the CFPB here.
If you have Genesis loans not included in the CFPB settlement, or if you have other types of private loans, then you may still have a “defense-to-repayment” type claim that you may assert against whoever is collecting on your private loans. It is a good idea to consider seeking legal advice to learn more about this option.