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LAFLA Applauds Cancellation of Remaining Loans for Former Corinthian Students

LAFLA welcomes this week’s announcement that the U.S. Department of Education will finally cancel the outstanding federal student loans of more than 500,000 borrowers harmed by Corinthian Colleges’ fraud. Corinthian Colleges operated multiple schools in Southern California under the names Everest College and Wyotech.

“Justice for Corinthian students is long overdue,” said LAFLA Senior Attorney Robyn Smith. “This is a civil rights victory for LAFLA and its many allies — other advocacy organizations, the students themselves, the California Attorney General, and lawmakers.”

Since Corinthian first acquired its chain of for-profit colleges in 1995, LAFLA has fought for debt cancellation for hundreds of clients whose dreams of higher education and high-paying careers were exploited by Corinthian to illegally rake in billions in federal aid. Most of our clients were unable to pay their federal loans and suffered wage garnishments, Social Security offsets, federal income tax seizures, ballooning balances, and difficulty finding housing or employment due to ruined credit. Those harmed by Corinthian’s illegal scheme are disproportionately low-income, Black, Latinx, veterans, working parents, first-generation students, and immigrants.

“While we are happy about today’s announcement, we are disappointed that the Department will not refund borrowers who have paid off their loans – including those who paid loans off through wage garnishments, Social Security offsets, and federal income tax refund seizures,” noted Robyn.

Despite the California Attorney General’s action against Corinthian in 2007 and clear evidence of widespread fraud when Corinthian collapsed in 2014, the Department had allowed Corinthian to continue its deceptive scheme for 20 years. The Department did not create a process through which borrowers could seek loan cancellation based on the deceptive and illegal business practices of for-profit colleges until 2016. As a result, prior to this time, most of our clients were not able to access debt relief. Even after 2016, the Department erected high evidentiary burdens for most students who did not fall into narrowly defined groups of students that it determined were eligible for debt cancellation.

Corinthian borrowers have waited far too long for this action, and many of LAFLA’s clients who attended other fraudulent schools — and deserve the same relief — continue to wait. LAFLA reaffirms its long-term commitment to advocate for debt cancellation for all of our student loan clients who have suffered years of debt collection and ruined credit after enduring the illegal and deceptive abuses of for-profit colleges. Learn about our work on student loan issues.

Are you a Corinthian borrower? Here’s what you need to know:

  • The Department will automatically cancel the outstanding debt of all borrowers who attended a Corinthian College. It has also stated it will also issue refunds to these borrowers for amounts they already paid. 
  • The Department will identify and notify all eligible borrowers. There is no action Corinthian borrowers need to take, no application or any other action required by eligible borrowers.

Were you similarly defrauded by a for-profit school and would like to see if you are eligible for debt relief?