Some Corinthian Students Aren’t Satisfied With the New Federal Debt Relief Process

Students Scrambling as Remaining Corinthian Colleges Shut Down

Corinthian Colleges have been in the news a lot in the last several months. It’s been a roller coaster of campus closures, lawsuits, controversy over debt and outraged students, but perhaps the biggest news came on June 8, in an announcement from Department of Education Secretary Arne Duncan: debt relief for up to 350,000 students.

Activists and former students who have been calling for Corinthian students’ debts to be discharged say the DOE’s solution isn’t enough.

A little background on the situation: At its peak, Corinthian Colleges had more than 100 campuses of Everest, Heald and WyoTech career colleges in the U.S. in Canada. Twelve U.S. campuses shuttered in July 2014, and the Consumer Financial Protection Bureau sued Corinthian in September 2014 for allegedly pushing students into borrowing private, high-cost “Genesis” loans. In February, the Consumer Financial Protection Bureau announced $480 million in debt relief for current and former students who borrowed Genesis loans, but that left out many students who felt they had been wronged by the colleges and the government, which provided federal loans for Corinthian students. On Feb. 23, a group of 15 Corinthian students (who weren’t among the group whose debt was discharged) declared a debt strike, saying they would not repay their loans. Things heated up with Corinthian closed the rest of its campuses on April 27.

The Corinthian 15 (organized by an Occupy Wall Street offshoot called the Debt Collective) grew to the Corinthian 100 — they met with government officials and relentlessly called for debt discharge, something that rarely happens in the student loan world. Student loans are seldom discharged in bankruptcy, so if you can’t pay, you can spend years suffering the consequences of default, including a trashed credit standing, wage garnishment and forfeiture of any tax refunds.

When the Department of Education announced the debt-discharge process for Corinthian students, it seemed the Corinthian 100 finally gotten what they wanted.

They hadn’t. A statement on the Debt Collective’s website rails against the Department of Education, Duncan, and the response to Corinthian students’ requests:

“If Education Secretary Arne Duncan was truly ‘committed to making sure students receive every penny of relief they are entitled to under law’ he would sign the ‘Order for Discharge of Federal Student Loan Debts’ the Debt Collective sent him last week, immediately and automatically discharging Corinthian students’ debts. Students are entitled to receive full relief under law. The legal and most painless possible process for students is no process — they deserve an automatic discharge of their debts. … In place of this obvious option, the Department of Education’s “solution” is a bureaucratically tortured process designed to provide relief only to those who hear about it and can figure out how to navigate unnecessary red tape.”

Students whose schools closed on April 27 or those who feel they were defrauded by Corinthian must apply for relief. If all those students applied and received debt relief, it could cost $3.5 billion. While their application is processed, debtors can request their loans go into forbearance. For those who have already defaulted, the application would suspend debt collection activity on their loans.

The move has received a lot of attention, positive and negative, and the Debt Collective is doing its part to highlight what it sees as negatives. Debt Collective organizers did not respond to multiple requests for comment from

Meanwhile, students can start applying for loan relief. Details on the process can be found on the Department of Education’s website.


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