11.06.15

Durbin, Madigan Call for Federal Debt Relief for Former Everest College Students

[CHICAGO] – At the invitation of U.S. Senator Dick Durbin and Illinois Attorney General Lisa Madigan, Joseph Smith, Special Master appointed by the U.S. Department of Education (ED) to oversee the federal student debt relief process for former Corinthian students, met today with several students who attended the school’s Illinois campuses and remain buried in federal student loan debt.

Smith is responsible for advising ED on issues related to Corinthian and will help develop a broader system to aid students at other institutions who are seeking debt relief of their federal student loans because they believe they were defrauded.  Durbin has encouraged the Department to develop a simple process that students of Corinthian and other schools can easily navigate without the help of an attorney and to recognize findings and evidence of state Attorneys General and other federal agencies when considering possible relief for students.

While many former Corinthian students across the nation are eligible to discharge their federal student loans, students who attended the company’s Illinois campuses, branded as Everest College, are not currently eligible to do so because those campuses were sold to ECMC as opposed to closed.  Durbin and Madigan are urging the Department of Education to take additional action to allow Illinois students wronged by Corinthian to receive loan forgiveness by filing defense to repayment claims and for the Department to develop a simple, borrower-friendly process for these students.

“For years Corinthian lured students with flashy ads and misleading promises, leaving them with mountains of debt and little to show for it in the way of a meaningful education. Corinthian’s fraudulent behavior has left thousands of students in financial desperation. We can’t simply write these students off as collateral damage and move on,” Durbin said. “I’m pleased that the Department of Education and Special Master Smith are working to provide federal student debt relief to those students and I have encouraged the Department and Mr. Smith to develop a simple process for victimized students to receive this relief.”

“Corinthian relentlessly pursued prospective students, pressured them to enroll, used false job placement rates and misrepresented job prospects. As a result, students were left unprepared or ineligible for work in their fields,” Madigan said. “We must ensure these students obtain student loan relief so they can build a future they envisioned when they enrolled in college.”

In recent years Corinthian was the subject of approximately two dozen state and federal investigations, three lawsuits brought by Attorney General Madigan, a $30 million fine by the Department of Education, and a lawsuit from the Consumer Financial Protection Bureau that resulted in a federal district court last week ordering Corinthian to provide $531 million in restitution to defrauded Corinthian students. 

In February 2015, Corinthian sold most of its campuses to the debt collection company ECMC, and in April 2015 Corinthian closed its remaining campuses. Corinthian filed for bankruptcy in May 2015.  Since the collapse of Corinthian Colleges, Incorporated, the for-profit college industry has experienced a long-overdue reckoning as state and federal investigations and lawsuits against the largest companies continue to accumulate.

Durbin has been working for years to protect students from the predatory practices of the for-profit college industry.  The industry receives more than $25 billion in federal dollars annually, which is enough funding to make it the ninth largest federal agency.  While for-profit schools enroll only about 10% of all college students, they take in 20% of the Department of Education’s federal student aid funds and account for a disproportionate 40% of student loan defaults. 

Attorney General Madigan pursued litigation against national for-profit colleges for fraudulent marketing practices, and she is leading a multistate investigation into the student loan provider Sallie Mae (now Navient). Earlier this spring, Madigan filed suit against five companies for targeting people struggling to repay student loan debt. Madigan was also the first state attorney general to file lawsuits against emerging student loan debt relief scams. Last year, she testified about the role of states in protecting higher education students before the U.S. Senate, including a call for stronger protections under federal law for student loan borrowers.