INSIDE HIGHER ED: Debt Relief Battle Continues

Career College Central Summary:

  • Corinthian Colleges’ declaration of bankruptcy on Monday finalizes the for-profit college’s unprecedented collapse that has morphed into a political firestorm for the Obama administration — which U.S. Department of Education officials are racing to extinguish.
  • What began last year as a paperwork dispute between Corinthian and Education Department regulators is now a high-profile battle over student debt forgiveness. And department officials are scrambling to figure out how, and in what form, they will provide debt relief to former Corinthian students.
  • Amid growing pressure from congressional Democrats and labor and consumer groups, federal officials sought to make clear Monday that they’re committed to debt relief for students who were “defrauded by Corinthian” — even if they’re not yet sure how to provide it.
  • “We will do everything we can to get defrauded borrowers the relief to which they are entitled by law,” Under Secretary of Education Ted Mitchell said in an interview.
  • Mitchell spoke after a group of former Corinthian students pushing to have their loans forgiven backed out of a meeting with Education Secretary Arne Duncan that was scheduled for Monday.
  • The group said it was concerned that the department would use the meeting as political cover to announce a debt relief process that was more stringent than the students are seeking.
  • The students, known as the Debt Collective, are pressing the Education Department to forgive the loans of hundreds of former Corinthian students under a virtually unused provision of federal law that allows borrowers to assert a college’s misconduct as a reason why they shouldn’t have to repay their federal loans.
  • The group canceled the meeting with Duncan because, they said, they believed the department planned to require individual students to prove that Corinthian had injured them before forgiving the loans. That would be an unfair burden on students, the group said. Instead they want the department to wipe out the federal loans of a large swath of students who attended Corinthian.

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