Seventeen House Democrats are urging the U.S. Department of Education to move faster to automatically discharge thousands of Corinthian Colleges student loans. File photo by zimmytws/Shutterstock
WASHINGTON, Oct. 1 (UPI) -- House Democrats are urging the U.S. Department of Education to automatically discharge thousands of Corinthian Colleges student loans, totaling an estimated $3.5 billion, and demand an action timetable be put into place immediately.
U.S. Rep. Janice Hahn, D-Calif., is one of 17 House Democrats who said the government's program designed to help cancel Corinthian student debt, launched in June, has been moving too slowly. They said the appointed special master, Joseph Smith, has given no timetable for when borrowers can expect relief and has not contacted tens of thousands of students who may be eligible for a refund.
"It has been three months since the Department of Education said it would create a debt relief process but we have seen almost no progress," Hahn said. "They have not given us a clear timeline and the vast majority of Corinthian College victims don't even know they can apply for debt relief."
In late April, Corinthian Colleges, which operated Everest, Heald and Wyotech, was slapped with a $30 million fine for misrepresenting job-placement rates and ordered to stop enrolling students in California.
Days later, the school announced it would cease operations in the United States, stranding some 16,000 students and cutting about 2,700 employees. The school filed for Chapter 11 bankruptcy protection May 4.
In June, the Education Department announced a bailout plan for Corinthian students, allowing them to seek loan forgiveness. Smith, hired to guide the distribution of the financial relief, said in a September report the department goal was to develop a debt-relief system for defrauded federal student loan borrowers "with minimal burden on borrowers."
To be considered for student loan relief, a borrower has to submit a "defense to repayment claim" showing the school violated the law. So far, the department has already received about 4,000 claims. The House letter criticized Smith for moving slowly to provide a timeline for processing these claims and not reaching out to as many affected students as possible. The report shows only students at Heald College were contacted, leaving out thousands who attended Everest and Wyotech.
"Given the significant evidence of fraud, we request that the Department of Education use its statutory authority under the Higher Education Act to automatically discharge the debt of all Corinthian students," House members said. "Allowing these borrowers to avoid the lengthy application and approval process is the only way to ensure that every deserving student receives the relief they are entitled to under the law."