{"id":5202,"date":"2015-02-04T17:35:52","date_gmt":"2015-02-04T23:35:52","guid":{"rendered":"http:\/\/news.medill.northwestern.edu\/chicago\/?p=5202"},"modified":"2015-02-05T08:03:00","modified_gmt":"2015-02-05T14:03:00","slug":"for-profit-college-agrees-to-forgive-almost-half-a-billion-in-student-debt","status":"publish","type":"post","link":"https:\/\/news.medill.northwestern.edu\/chicago\/for-profit-college-agrees-to-forgive-almost-half-a-billion-in-student-debt\/","title":{"rendered":"For-Profit College Agrees to Forgive Almost Half a Billion in Student Debt"},"content":{"rendered":"

By Lucy Ren<\/p>\n

Troubled for-profit college chain Corinthian Colleges Inc. agreed with the U.S. Department of Education and the Consumer Financial Protection Bureau (CFPB) to forgive at least $480 million on private student loans, marking an \u201cunprecedented debt relief,\u201d according to CFPB Spokeswoman Moira Vahey.<\/p>\n

The debt relief announced on Tuesday marks a 40 percent reduction in Corinthian\u2019s principal balance on private loans, according to a Tuesday press release by CFPB<\/a>.<\/p>\n

The nonprofit education firm ECMC Group Inc.<\/a> announced on Monday that it had finalized its acquisition for 56 of the 107 Everest and WyoTech campuses from Corinthian Colleges. Zenith Education Group, a new nonprofit subsidiary of ECMC is taking over the colleges.\u00a0<\/em><\/p>\n

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\"Corinthian<\/a>
Corinthian operates under three school names with different degree programs. (Corinthian Colleges)<\/figcaption><\/figure>\n

CFPB filed the lawsuit on Sept. 16 against Corinthian Colleges for predatory lending scheme. \u201cThe lawsuit is ongoing,\u201d Vahey said.<\/p>\n

According to the complaint<\/a>, Corinthian \u201cdeceptively and unfairly induced students to incur significant debt,\u201d and \u00a0\u201ctook illegal aggressive action to collect on that debt.\u201d Campus staff members received bonuses based in part on their success in collecting past-due payments from students. Other efforts to collect such payments included \u201cpulling students out of class, preventing students from attending and registering for class and terminating students\u2019 computer access.\u201d<\/p>\n

Corinthian had strong financial incentives to induce its students to take out its private loans, known as the \u201cGenesis loans.\u201d Every loan dollar that Corinthian induced its students to borrow allowed Corinthian to \u201creceive up to an additional nine dollars in Title IV aid,\u201d the lawsuit stated.<\/p>\n

\u201cFor too many students, Corinthian has turned the American dream of higher education into an ongoing nightmare of debt and despair,\u201d said CFPB Director Richard Corday in a September press release<\/a>.<\/p>\n