The Consumer Financial Protection Bureau says tens of thousands of students received the loans, though it’s unclear how many will benefit from the forgiveness. More than 60 percent of Corinthian students with those loans defaulted within three years after being subject to interest rates that were roughly twice the rates for federal loans.
“These consumers were lured into high-cost loans destined to default and then targeted with aggressive debt collection tactics,” said CFPB Director Richard Cordray.
He said the loan forgiveness should help current and former students.
The troubled loans led the CFPB to file suit in September against Corinthian, which has operated a network of campuses under different names around the United States and Canada. The debt forgiveness deal announced Tuesday releases the new owners of Corinthian’s Everest and WyoTech campuses, ECMC Group, from potential liabilities for the “alleged illegal activity.”
With the deal in place, ECMC Group finalized its acquisition of more than 50 campuses formerly run by Corinthian that enroll nearly 30,000 students.
“Today, we begin delivering on our promise to transform the Everest and WyoTech schools we have acquired into first-rate career colleges where success is measured not by how many students we enroll, but by how many students complete their programs and get fulfilling jobs when they graduate,” said David Hawn, president and CEO of ECMC Group, based in Oakdale, Minnesota.
