Massachusetts Attorney General Maura Healey has asked the Department of Education to forgive the school loans of hundreds of students from the state enrolled at Corinthian Colleges Inc., a for-profit company investigated by federal authorities for practices that left many students deeply in debt.

Corinthian operated in Massachusetts as Everest Institute. Former AG Martha Coakley sued the company last year over allegations that it had misrepresented training programs and job-placement rates, leaving many students without employment and unable to repay their loans.

Corinthian has nearly collapsed under the weight of several state and federal investigations. The company entered into an agreement with the Education Department last summer, leading to the withdrawal of federal funding for student loans to the school. The company then shuttered some programs, including at two locations in Massachusetts, and more recently sold more than 50 locations for $24 million to a nonprofit affiliate of ECMC Group, a Minneapolis-based company whose primary business is debt collection.

The federal government had funneled more than $1 billion a year to Corinthian through financial aid to students.  

Corinthian, based in California, was once the nation’s largest for-profit school, enrolling more than 70,000 students. More than 60% of Corinthian students defaulted on private student loans offered by the school, according to the Consumer Financial Protection Bureau. Tens of thousands also defaulted on federal student loans, said Pauline Abernathy, vice president of the Institute for College Access and Success, a Washington think tank.

Healey joins an effort led by Sen. Elizabeth Warren, D-Mass., to get federal education officials to relieve students of debts incurred at for-profit schools that are accused of deceptive recruiting, enrollment and lending. 

Warren and 12 other senators wrote to the Education Department in December demanding that it take stronger steps to help students with loans from problem schools. The Education Department has the authority to forgive student loans when a college violates a student's rights but it has not established a process for students to seek relief.

The senators want the Education Department to immediately discharge loans for students who attended Corinthian campuses and have legal claims against the school. Corinthian is currently the subject of lawsuits by the Massachusetts and California state attorneys general and the CFPB, and is under investigation by more than a dozen other state attorneys general for unlawful practices.

The letter was signed by Senators Warren; Barbara Boxer, D-Calif.,; Richard Durbin, D-Ill.; Jack Reed, D-R.I.; Sheldon Whitehouse, D-R.I.; Jeff Merkley, D-Ore.; Al Franken, D-Minn.; Richard Blumenthal, D-Conn.; Brian Schatz, D-Hawaii; Tammy Baldwin, D-Wis.; Christopher Murphy, D-Conn.; Mazie Hirono, D-Hawaii; and Edward Markey, D-Mass.

 

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