Dive Brief:
- An ad-hoc committee representing former students’ interests in the Corinthian bankruptcy case has announced the U.S. Department of Education’s agreement to suspend all judicial activity related to student loan debt collection for 120 days.
- This period is expected to help the students and their lawyers negotiate long-term relief for nearly half-a-million students affected by the major for-profit school operator.
- With the Department of Education’s action, the committee will stop trying to go through the courts to halt collection efforts on Corinthian students.
Dive Insight:
Corinthian Colleges Inc. filed its bankruptcy case in May, acknowledging its own demise after a year-long struggle to survive through multiple investigations and lawsuits attacking its student recruitment tactics and operating procedures. The company has relatively little assets compared to its debt, and students are unlikely to get any damages directly from the wreckage. The Department of Education, however, has the power to forgive Corinthian students’ federal loan debt. It already has for a select group who were still attending one of the remaining campuses when Corinthian announced its abrupt closure.
