WASHINGTON, Oct. 29 (UPI) — A federal judge found the for-profit Corinthian Colleges is liable for $531 million in student loans, possibly opening the door for the government to forgive student loans owned by the for-profit school.
The judge ruled Wednesday the now-defunct Corinthian “engaged in deceptive practices” by misleading students about their career outlook.
The Consumer Financial Protection Bureau said the school lured thousands to take out private, high-interest loans to enroll in its programs. Corinthian then used “illegal debt collection tactics” to collect on the loans while students were still in school, the government watchdog agency said.
Thousands of others took out federal student loans before the school suddenly shut its doors in 2014.
Judge Gary Feinerman of U.S. District Court for the Northern District of Illinois ordered Corinthian to reimburse loans made by private lenders to students of its colleges, which also includes Everest, WyoTech and Heald. However, since Corinthian filed for bankruptcy protection, it will not be able to pay. Even with that, some are hopeful the judge’s ruling will sway the U.S. Department of Education to forgive any federal loans students took out for a Corinthian education.
In total, 350,000 students owe about $3.5 billion that could be eligible for forgiveness.
David Halperin, a lawyer who advocates for changes to the for-profit college sector,said the ruling could pave the way to necessary changes. “That is the kind of finding that the Department of Education says it’s looking for in order to forgive debt by a large group of students.”
CFPB Director Richard Cordray said: “We all have much more work to do beforecurrent and past students who were hurt by Corinthian’s illegal practices can be made whole. We remain deeply concerned about risks facing student borrowers in the for-profit space and will continue to be vigilant in rooting out harmful practices.”
