WASHINGTON - The US Department of Education said on Monday it was moving to forgive much of the federal student debt of some of the 78,000 students who had attended the now-bankrupt Corinthian Colleges.
It will let students who left the schools run by the major for-profit chain on or after June 20 last year receive a closed-school discharge of their federal student loans. This is instead of the usual period of 120 days up until it closed its last campuses on April 26, effectively adding about six months to the eligibility period.
Santa Ana, California-based Corinthian, which had operated the Heald College, Everest and WyoTech schools and offered degrees in healthcare and trades, filed for bankruptcy on May 4. It entered Chapter 11 with $143 million (S$190 million) in debt and about $19 million in assets, according to Delaware bankruptcy court documents.
Late last year, Corinthian sold off more than half its campuses to non-profit education provider ECMC Group Inc. Thirteen campuses, included Everest and WyoTech in California, remained open up to the April 26 announcement.
In April, the Department of Education fined Corinthian $30 million for misrepresenting job placement rates to students in its Heald College system, and said that Heald would no longer be allowed to enroll students.
Founded in 1995, Corinthian was one of the largest US for-profit college operators, at one point employing more than 10,000 people, and running more than 100 campuses with 74,000 total students, court papers show.
For-profit education companies such as Corinthian, Apollo Education Group Inc and Strayer Education Inc, have struggled to attract students since a 2010 government crackdown revealed high student debt loads, low graduation rates and poor employability of graduates.