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U.S. appoints monitor to oversee Corinthian Colleges claims

Students at Everest College in Alhambra leave the campus with paperwork on loan forgiveness in April, after Corinthian Colleges abruptly shut down its remaining campuses. The U.S. Department of Education announced an expanded student debt relief plan in June.

Students at Everest College in Alhambra leave the campus with paperwork on loan forgiveness in April, after Corinthian Colleges abruptly shut down its remaining campuses. The U.S. Department of Education announced an expanded student debt relief plan in June.

(Al Seib / Los Angeles Times)
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The U.S. Department of Education on Thursday appointed an advisor to help guide the debt relief process for potentially hundreds of thousands of students who attended now-defunct Corinthian Colleges campuses.

Earlier this month the department announced an expanded debt forgiveness plan for students who attended schools owned by Corinthian, which filed for bankruptcy protection in May. The Santa Ana for-profit college operator had been on a downward spiral since last year, when the Department of Education began a probe into falsified job placement rates.

On Thursday the department appointed Joseph A. Smith as special master to help set up the claims process for former students. Smith oversees the $25-billion national mortgage settlement involving flawed foreclosures, and the $13-billion settlement between the U.S. Justice Department and JP Morgan Chase.

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Smith, a former banking commissioner in North Carolina, said there are many similarities between homeowners caught up in the foreclosure crisis and students who attended Corinthian’s schools.

“You have a particularly heavy impact on low- and moderate-income people and communities of color,” Smith said in a call with reporters on Thursday. He said the goal is to “handle these matters in a way that is humane, respectful of the borrowers and fair to everyone.”

In July Corinthian announced plans to sell off or close the vast majority of its Everest College, Heald College and Wyotech campuses across the country. In April the company suddenly closed more than two dozen of its remaining campuses, leaving about 16,000 students in the lurch.

Until the department announced its expanded loan forgiveness plan earlier this month, only 16,000 students who were attending shuttered campuses had a clear path to debt forgiveness. The new policy will allow other students to apply for loan relief if they believe they were victims of fraudulent marketing and recruiting practices.

The vast majority of students who attended Corinthian’s Heald College schools between 2010 and 2015 would also be eligible for federal loan discharges because of a Department of Education investigation that found misleading job-placement numbers.

Undersecretary of Education Ted Mitchell said Smith will help the department develop a simple application process for all borrowers seeking loan forgiveness, and help devise a broader system for students at other schools who believe they were defrauded.

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“We want to ensure that students receive every penny of relief they are entitled to under the law,” Mitchell said.

Since 2010, Corinthian enrolled nearly 350,000 students who took out federal loans worth about $3.5 billion.

Former Corinthian students can find out more information at studentaid.gov/corinthian or by calling (855) 279-6207.

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