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DOE Must Stop Collecting Loans From Corinthian Students

By William Vogeler, Esq. on June 27, 2018 7:00 AM

The U.S. Education Department cannot collect students loans from thousands of former students of the defunct Corinthian Colleges, a federal judge said.

Judge Sallie Kim clarified an earlier ruling because the education department had resumed collections based on "partial forgiveness." The department acted recently after denying 8,600 student claims.

The students' plight began years ago when Corinthian Colleges defrauded them about job opportunities while raking in loans they could not repay. The latest ruling gives them some relief, but their nightmare is not over.

Students' Plight

Represented by Project on Predatory Student Lending and legal aid groups, the students filed an injunction to stop the education department's collection actions. They said the government wrongfully used Social Security data to track student earnings.

In their class-action, the students also want the education department to restore a loan forgiveness program that the Trump Administration revised. The new program changed the deal, requiring borrower's to repay what they can afford while "protecting taxpayers."

In her latest order, Kim blocked collections for students who have received partial forgiveness, applied for debt relief or are waiting for decisions on their applications.

However, the judge said the education department may grant full relief to the Corinthian students while the case is pending in San Francisco.

Twice Rebuked

Toby Merrill, director at the Project on Predatory Student Lending, said the court has been rebuked in court "not once, but twice for violating the rights of students it should be serving."

"Corinthian ripped off hundreds of thousands of students and the Department of Education is making it worse by collecting their illegal debts, prolonging their suffering," he told SF Gate.

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