Dive Brief:
- Current and former students at more than 50 former Corinthian College campuses will receive more than $480 million in relief for their student loan debt.
- The new owners of the 50 campuses, ECMC Group, will pay for the debt relief and won’t offer private loans to students for seven years, along with adopting consumer protection policies, the Consumer Financial Protection Bureau reported.
- By agreeing to the bureau’s demands, ECMC avoids potential liability for the allegations leveled against Corinthian by the agency, including illegal collection tactics and predatory lending, the Chronicle of Higher Education reported.
Dive Insight:
This agreement clears what could have been a significant hurdle for approval of the deal. The students’ debt relief will include a 40% cut in the principal balance they owe, and ECMC will make sure that the third party holding the loans won’t sue or threaten to sue for failing to pay off the debt. Also, ECMC will see that negative credit report references to the loans will be deleted. The agreement states that it is not a concession by the consumer protection bureau that it doesn’t have “well-founded claims” against ECMC or Corinthian.
