Corinthian Colleges Loans Are Being Forgiven!
Thanks in part to the incredibly brave efforts of the Corinthian 15 (now rebranded “The Corinthian Collective since they’ve grown to 1,500+ members!), President Obama’s Administration decided to forgive all student loan debt related to Corinthian colleges courses.
This decision was made in 2016, and Corinthian Colleges Forgiveness remains fully-funded for 2017. However, it is possible that President Trump’s Student Loan Debt Plan could wipe out these incredible forgiveness benefits, so if you think you qualify for the loan discharge, then you need to apply for it immediately!
The Corinthian Colleges Student Loan Forgiveness Program offers forgiveness to any student loans that were taken out to pay for tuition and fees at any Corinthian-affiliated school, including:
- Everest College
- Heald College
- WyoTech (Wyoming Technical Institute)
The Corinthian Colleges Student Loan Debt Forgiveness Program was officially announced by President Obama on June 8th, 2016, and has the capability of paying out a total of $3.6 BILLION in forgiveness benefits, but you should be aware that these benefits do come with some eligibility restrictions.
This post outlines the details of the plan, walking you through each step in the process of determining whether or not you qualify for the benefit, as well as explaining how to complete the application process for claiming your benefits.
Why Are Corinthian Loans Being Forgiven?
Corinthian Colleges, Inc. got hammered by federal enforcement actions during a stretch between 2015 and 2016, including being hit with all sorts of penalties for misleading students about job placement rates and pressuring them into taking out massive student loans.
As a result of those enforcement actions and a slowdown in new student signups, Corinthian Colleges was in a world of financial trouble and ended up having to sell off a bunch of its schools to Zenith Education Group.
At first, it seemed like the company could pull through and that Corinthian-affiliated schools would continue to operate, but they abruptly announced they were closing the rest of their schools (about 30 more campuses) on April 27th, 2015.
What Happened to the Students?
With many thousands of students still enrolled in Corinthian-affiliated programs, and many of them saddled with enormous student loans, a financial crisis was sure to ensue.
First came the protests, including the Corinthian 15 strikers group, who publicly pledged to refuse to pay back their Corinthian-affiliated student loan debt.
Next came tons of media attention and further pressure to offer some form of real financial assistance to anyone impacted by the school closures.
And finally, there was a happy ending to the story, when on June 8th, 2015, the Department of Education announced that they would support many of the students who got caught up in Corinthian’s collapse.
This promise became the plan for the Corinthian Colleges Student Loan Forgiveness Program, which is currently not only one of the best Federal Student Loan Forgiveness Programs on offer, but also covers Private Student Loan Forgiveness as well.
In fact, virtually all students caught up in the closure of Corinthian schools will qualify for at least some form of financial assistance, with some borrowers receiving a literal 100% loan discharge, and even refunds for payments they’d previously made.
How Does Corinthian Colleges Debt Forgiveness Work?
The rules are pretty simple. To qualify for Corinthian colleges loan forgiveness benefits, you must satisfy one of the two following eligibility conditions:
- Two Types of Corinthian Forgiveness Benefits
- Closed School Relief – You qualify for the Closed School Student Loan Relief Program if you attended one of the Corinthian schools that closed on April 27th, 2015
- Defrauded Student Relief – You qualify for the Defrauded Student Relief Program (the Borrowers Defense Against Repayment Program) if you were defrauded (lied to, scammed, etc.) by a Corinthian school that you went to, or you believe that the school violated state laws (whether or not it was shut down)
The good news is that virtually everybody who attended a Corinthian school in the past several years is going to qualify for one of the above programs.
The bad news is that only the first program makes it easy to qualify for loan forgiveness, because the second program requires some complicated legal writing, and a detailed application process.
Closed School Relief
The first way to qualify for Corinthian forgiveness benefits is via the Closed School Relief program, which is about as cut-and-dry as it gets; if you went to one of the Corinthian schools that was shut on April 27th, the you’re going to qualify for forgiveness.
That makes this one of the simplest, easiest, best student loan debt forgiveness programs on the market, since it doesn’t require a ton of background work, consulting fees from attorneys or student loan experts, or much actual time spend researching and writing up explanations of what happened to you.
If you were a student at a Corinthian school when the school shut down, then you’ll qualify for having your loans discharged. Pretty awesome right?
I’ll explain the details to how it works below.
Defrauded Student Relief
The more complicated path to forgiveness is the second program listed above, called the Defrauded Student Relief program, which is far more nuanced, since it requires proving to the Federal Government that Corinthian Colleges lied to you, essentially doing false advertising, in order to get you to sign up for one of their programs.
Maybe Corinthian promised that you’d be able to get a great job, pay back your student loans quickly, or make a huge salary by investing time and money into their education program? Maybe they promised something else that they didn’t deliver on? As long as you can show that they said something they shouldn’t have, then you should qualify for forgiveness benefits too.
But, it’s not necessarily easy to prove that you were defrauded, since you’ll have to write a Borrowers Defense Against Repayment letter (which is a legal document), to prove that Corinthian violated some state or Federal law, and that your resulting loan should thus be discharged in full.
Scroll down to the section below called Defrauded Student Relief for advice on how to prepare your letter and qualify for this forgiveness benefit.
Two Options for Dealing with the Corinthian Closure
Keep in mind that you don’t have to pursue a student loan debt discharge if you attended Corinthian Colleges and you want to retain the credits you earned while in school with them.
It is possible to instead apply to have your credits transferred to another University, which lets you retain whatever credits you’ve previously earned, but which will also require you to keep paying back the student loans you took out to pay for those credits.
The reality of the situation is that you’ve got two options for dealing with the Corinthian closures, which are:
- You can apply for a Closed School Student Loan Discharge
- You can transfer the credits you earned to another college or university and continue your higher education pursuit in a similar program
If you choose to take the Closed School Discharge route, then you’ll be eligible to receive up to 100% forgiveness for any federal Direct Loans, FFEL Program Loans or Federal Perkins Loans that you took to attend the school.
But that’s not all, because not only will you get the rest of your remaining student loan debt wiped out, but you’ll also receive reimbursement for whatever amount of money you’ve already paid the Federal Government on these loans.
What Should You Do?
Personally, my suggestion is to take the relief benefit, especially if you think you’ll ever have trouble paying back the student loans you borrowed.
There’s a couple caveats to the way that Closed School Discharges work though, so you’ll need to keep the following in mind. You won’t be able to qualify for the Corinthian Colleges Closed School Discharge Program if:
- You finished your program at a Corinthian school
- You already transferred your Corinthian credits to another school in a similar program
- You were not attending the school when it closed, or you withdrew from Corinthian before June 20th, 2014
Which Corinthian Schools Closed on April 27th, 2015?
Here’s a list of the schools that shut down on April 27th, 2015:
|Everest College||Alhambra, CA|
|Everest College||Anaheim, CA|
|Everest College||Gardena, CA|
|Everest College||Ontario, CA (1460 S. Milliken Ave)|
|Everest College||San Bernardino, CA|
|Everest College||Santa Ana, CA|
|Everest College||Ontario, CA (1819 South Excise Ave)|
|Everest College||Rochester, NY|
|Everest College||Reseda, CA|
|Everest College||Phoenix, AZ|
|Everest College||Mesa, AZ|
|Everest College||Torrance, CA|
|Heald College||San Francisco, CA|
|Heald College - Honolulu||Honolulu, HI|
|Heald College||Portland, OR|
|Heald College - Kaneoche MCB||Kaneohe, HI|
|Heald College - Concord||Concord, CA|
|Heald College - Milpitas||Milpitas, CA|
|Heald College - Hayward||Hayward, CA|
|Heald College - Modesto||Salida, CA|
|Heald College - Roseville||Roseville, CA|
|Heald College - Salinas||Salinas, CA|
|Heald College - Stockton||Stockton, CA|
|Heald College - Rancho Cordova||Rancho Cordova, CA|
|Heald College - Fresno||Fresno, CA (255 West Bullard)|
|Heald College - Fresno Satellite||Fresno, CA (255 East River Park Circle)|
|WyoTech||Long Beach, CA|
|WyoTech||Los Angeles, CA|
|WyoTech||City of Industry, CA|
Again, it’s pretty simple. If you were a student at any of the schools listed above on or after June 20th, 2014, then you’re going to qualify for the Corinthian Closed School Discharge Program.
How to Apply for a Corinthian Colleges Closed School Relief Discharge?
That’s the easy part. Do one of the following:
- Download and fill out the Closed School Loan Discharge Application form, then return it to whoever is servicing your loan (whoever you send monthly payments to)
- Contact whoever is servicing your loan and ask them what you need to do. Tell them that you know you qualify for the Closed School Relief discharge, and they will be legally obligated to walk you through the application process
If you aren’t sure who your loan servicer is, then to to the My Federal Student Aid website and login. This system will tell you. Or, call 1-800-4-FED-AID.
This is an awesome opportunity for anyone who went to a Corinthian school during this time period, but didn’t finish their program and who isn’t interested in continuing on at another school.
If you fall into that category of people, then you’d better take action now, because there’s not way to be certain that President Trump’s impending student loan reforms won’t wipe out these benefits entirely.
Defrauded Student Relief
This is a much more complicated process than the Closed School Relief benefit, since it will require some legal work on your behalf.
To qualify for the Defrauded Student Relief benefit, you’re going to have to use something called the “Borrower Defense to Repayment” provision, which is complicated, but here’s how it works:
The Borrower’s Defense Against Repayment provision allows you to discharge student loans if you can prove that the school committed fraud by either doing something or failing to do something that violated state or Federal laws, and that this violation is somehow related to your loans or the educational services you took loans out to finance.
Here’s the beauty of the Borrower’s Defense Against Repayment Program – you can use this for any school – not just Corinthian colleges schools – whether or not the school has closed, and whether or not you completed their educational program.
That means that you can get out of student loan debt, at no cost to yourself, by proving that the school defrauded you in some way, and that your student loans should thus be voided and entirely discharged.
The DOE Response to a Flood of Borrowers Defense Against Repayment Letters
Because the Department of Education thinks there will be so many people trying to do this, they’ve made it easier than ever before to get loans discharged under the Defense Against Repayment Provision.
To apply for the benefit, the Department of Education initially required that people send an email or a letter including all of the following items (at a minimum – the more detail you provide, the better):
- Things to Include In Your Defense Against Repayment Letter
- State, in writing, that you “wish to assert a borrower defense to repayment based on state law
- Your first, middle and last name
- Your date of birth
- The last 4 digits of your Social Security number
- Your home address
- Your telephone number
- Your email address
- The name and location (address) of the school you attended
- The name of the program of study you were attending (basically your major)
- The degree, certificate, or other credential that you earned, or were seeking (Masters in XXX, Certificate of XXX, Bachelors in XXX, etc.)
- Your dates of enrollment at the school
- Documentation confirming your school, program of study and dates of enrollment (use transcripts or registration documents)
- Details about how the school defrauded you, including things like: the state and applicable law or cause of action, specific acts of alleged misconduct, how the alleged misconduct affected your decision to attend the school and take out loans to pay for the costs, the injury you’ve suffered as a result of the school’s misconduct, any other information that will help your cause
But I’ve got good news, because in 2017 you don’t have to write this letter from scratch anymore, since the Department of Education has finally released their official Borrowers Defense Against Repayment Online Application Form, which you can find here.
As you’re filling this application out, you’ll find that almost everything is pretty straightforward, except the part that asked you to detail how the school defrauded you.
This is where the rubber meets the road, and where many people turn to attorneys or student loan debt relief agencies for help, since your explanation needs to be air-tight in order to ensure that you’ll receive the discharge you’re applying for.
What you need to do in this part of the process is explain how the school broke the law in order to convince you to sign up for their higher education program.
If they promised anything about guaranteed income or employment, then you can probably use that. For example, if they said you’d earn more money after graduating, they’re screwed.
If they said you would be able to find a management position, they’re screwed. It’s things like that – promises of employment or income – that get the schools in hot water.
Should I Hire Someone To Help Prepare My Borrowers Defense Letter?
Personally, I would pay one of the expert student loan relief agencies to help draft your letter, unless you’ve got some detailed experience doing stuff like this.
When it comes to receiving a Borrowers Defense Against Repayment Discharge, you really do only get one chance at an approval, so screwing up this part of the process means being stuck with your student loan debt forever.
My advice is to consult with the Student Loan Relief Helpline, which is my favorite student loan debt relief agency, who will research your situation, find out how to frame your letter, write the entire thing for you, and handle all the paperwork required in the process as well.
And while you will have to pay them for this service, the cost is minimal compared to the prospect of paying off the entirety of your student loans, especially if you consider that cost as an investment in ensuring that you get your Borrowers Defense Against Repayment Letter approved for a discharge.
Your first call to the Student Loan Relief Helpline is free, and you will not need to pay them anything until you agree to have them start working on your behalf, so all you’ve got to lose by calling is a couple minutes of your time.
What Happens After My Borrowers Defense Against Repayment Letter Is Received?
After the Department of Education gets your letter, they’ll place your student loans in forbearance and collections activity will cease on any defaulted loans you might have while they investigate your claim.
Keep in mind though that interest will continue to accumulate on your loan while they investigate your claim, so if you end up not getting the discharge, this could be costly.
One thing you need to look for is a response email from firstname.lastname@example.org which says “Borrower Defense Claim” in the Subject Line, as this is the way that the Department of Education will respond to your form submission.
If that letter says that you’re all set to receive either a full or partial approval of your Borrowers Defense to Repayment Application, then you will know that you’ve been marked to get your loans discharged entirely.
But don’t start the party just yet, because things won’t be finalized until you receive a followup email from the Department of Education, or from your Federal Student Loan Servicer, which clearly states that your loan has been discharged.
Again, my advice on this process is to pay an expert to help you draft the Defense Against Repayment Provision Application Form, handle the submissions and all the paperwork, since it’s your one shot and only hope at receiving complete student loan forgiveness.
Spending a few hundred dollars now to ensure that you save tens of thousands of dollars on student loans later is just good economics.
It’ll also reduce a lot of the anxiety involved in this process, anxiety that’s currently gripping millions of Americans hoping that they too will be able to qualify for a Borrowers Defense to Repayment Discharge.
Will I Owe Taxes on Forgiven Debt?
At the time of this writing, the Corinthian Debt Forgiveness Program still requires that any student loan debt forgiven will end up leading to tax liabilities for the borrower.
That means, whatever amount of money you have forgiven via the program has to be listed on your state and Federal tax returns as ‘income’, and you’ll be taxed accordingly.
For some borrowers, the tax bill might be an even bigger burden than continuing to pay off the old loans, leading to a tricky situation.
You’ll need to determine just how much you’re going to end up owing in both Federal and State taxes before deciding if a Corinthian discharge is truly the best option for you.
One bright note – in California, State Senator Janet Nguyen’s resolution to “Eliminate Tax Liability on Forgiven Corinthian College Student Loan Debt” appears to have been unanimously passed.
Once fully enacted into law, this bill will protect California borrowers from having any State tax liabilities from forgiven Corinthian Colleges student loan debt.
These borrowers will still have to pay Federal taxes on any forgiven debt, but at least we’re seeing steps in the right direction on this issue.
Will I Have to Pay Accrued Interest on Forgiven Debt?
The only interest you’ll be forced to pay is whatever accrues during the time that your loan is placed on Forbearance (while your Defense to Repayment claim is being evaluated), and only if you stop making payments to cover interest accrual during that time.
If your claim is accepted and your Corinthian debt gets forgiven, then the interest which accrued on your loan will be forgiven, along with the principal balance.
Just make sure that you continue making payments on your debt (at least enough to cover the interest accrual) while your claim is being evaluated, and you shouldn’t end up in any trouble.
Did You Go To Heald?
I’ve got great news for Heald students!
The Department of Education basically hates Heald College, because they determined that Heald lied about job placement rates for many of its degree programs between 2010 and 2014.
If you were enrolled in any of the Heald College programs listed here, and you want to apply for the defense to repayment discharge, then you don’t have to write the huge defense against repayment letter outlined above, but can simply do this:
- Download or print out this Attestation Form
- Fill it out, sign it, then send it to the Department of Education with the attachments that it requires
- When you send it in, you can do it via email to FSAOperations@ed.gov, or by snail mail to Department of Education, PO Box 194407, San Francisco, CA 94119
Questions About Defense Against Repayment
If you’ve got questions about how the whole Defense Against Repayment thing works, then you can call the Government’s Borrower Defense Hotline at (855) 279-6207.
They’re available to walk you through the process Monday to Friday, 8:00 am to 8:00 pm EST.
You can also try contacting the Student Loan Ombudsman Group, or leaving a comment at the bottom of this page.
Other Questions About Corinthian Debt Relief?
If you have other questions about the Corinthian debt relief program, then check out the Federal Government’s official FAQ page on the program, here.
Still Have Questions?
If you still can’t find answers to your questions, then feel free to ask me in the comments section below.
I’ll try to get you a response within a day or two.
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