BUSINESS INSIDER: There’s a fight between angry student debtors and the Education Department over a law nobody knows how to interpret

Career College Central Summary:

  • For-profit college chain Corinthian Colleges abruptly shut down at the end of April, amid federal and state investigations into its supposedly predatory practices. 
  • Now, former students and student advocacy organizations are seeking wholesale loan forgiveness under the "defense to repayment" provision within the Higher Education Act.
  • That law lets borrowers cite a college's "acts or omissions" as reasons why they shouldn't have to pay their loans back.
  • The only issue: The Department of Education (ED) admittedly doesn't know how to interpret the provision.
  • The provision was added just 15 years ago, and Secretary of Education Arne Duncan acknowledges that it hasn't really come up much before now, the Chronicle of Higher Education reported. 
  • "We don’t have a lot of practice in this," Duncan said last month, according to the Chronicle of Higher Education. "The rules aren’t very clear."
  • There are enormous implications for both student borrowers seeking relief, and the ED, depending on how the provision is interpreted.
  • Student advocacy groups are pushing the ED to issue a wholesale discharge of all loans for all students who attended Corinthian. The Corinthian 100 — a group of 100 college grads refusing to pay back their student loans and advocating on behalf of all Corinthian students — have met with the ED on numerous occasions.

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