Education Department giving up to $3.5 billion in Corinthian Colleges student-debt relief

WASHINGTON, June 9 (UPI) -- Former students of the now-bankrupt, for-profit Corinthian Colleges may be eligible to have their entire debt erased after the Department of Education announced new relief plans Monday.

Students whose school closed down and students who believe they were victims of fraud will receive debt relief.

More than 350,000 students took out about $3.5 billion in federal loans to attend a Corinthian College, according to CNN.

Up to 16,000 students will be eligible to request a school loan discharge. Fraud victims must "assert that a college's actions violated state law and affected their provision of educational services or their federal loan" to be eligible for student-debt relief.

"While some for-profit career colleges play a critical role in helping students succeed in their educational and training pursuits, too often, bad actors in the sector have preyed on some of our nation's most vulnerable students and taken advantage of hard-working Americans who simply want a better future for themselves and their families," U.S. Secretary of Education Arne Duncan said in a statement. "I am committed to ensuring that every student has access to an education that will put them on solid footing for a career, and I will hold schools accountable for practices that undercut their students and taxpayers."

Corinthian Colleges Inc., operator of higher-education schools like Everest University, filed for Chapter 11 bankruptcy protection on May 4.

In April, Corinthian Colleges was fined $30 million for misrepresenting job-placement rates and was ordered to stop enrolling students in California, where most of its remaining schools were located.

The company announced that all operations would cease in U.S. locations on April 27, affecting 16,000 students and cutting 2,700 employees. The now-defunct company once had more than 74,000 students enrolled and more than 10,000 employees.

"Where students have been harmed by fraudulent practices, I am fully committed to making sure students receive every penny of relief they are entitled to under law. We will make this process as easy as possible for them, including by considering claims in groups wherever possible, and hold institutions accountable," Duncan added.