Student loans can feel intimidating to anyone who has them. But they become doubly worrisome when you consider what could happen if your school were to abruptly close.
Recently, Corinthian Colleges—one of the biggest for-profit colleges in the United States—sold some of its locations to Zenith Education (many of which will be closing shortly), filed for bankruptcy. Corinthian then closed its 28 remaining schools, leaving around 16,000 students wondering what will become of both their education and the student loan debt they’d accumulated to date.
The rapid shutdowns were a result of Corinthian’s more than $143 million in debt, combined with pressure from ongoing federal and state fraud investigations. This included allegations that the company had misled students into believing that their degrees would be more valuable than they actually were.
In fact, the Department of Education found that between 2010 and 2014, Heald College—a schools under Corinthian’s umbrella—had exaggerated job placement rates for several of its degree programs.
This sort of shutdown doesn’t happen often. Most schools give students months, if not years, of advance warning before closing their doors, according to U.S. News & World Report.
Nevertheless, the unique case of Corinthian Colleges shows that it’s possible for a school to abruptly close. This can be terrifying for current students, who will suddenly find themselves on the hook for tens of thousands of dollars in coursework that might not even be transferrable. But if you’re stuck with student loans from Corinthian Colleges, loan forgiveness may provide some relief.
If you’re a former Corinthian student, if your school closed before you could obtain your degree, or if you believe that your school is guilty of fraudulent practices, the good news is that you have several ways to get your money back.
Here’s a quick rundown on student debt forgiveness options if you’ve attended Corinthian Colleges or other for-profit universities.
If You’re a Former Corinthian Student…
The Department of Education has set up a streamlined process to help former Corinthian students to apply for debt relief.
If you attended one of the Corinthian schools that closed on April 27, 2015, and had not yet completed your degree, then you could be eligible for loan forgiveness by applying for a closed school loan discharge.
You could also be eligible for loan forgiveness via discharge if you withdrew from a Corinthian school on or after June 20, 2014, regardless of whether you completed your degree. You could even receive a loan discharge of up to 100% of your student loans, in addition to a reimbursement for any repayments you’ve made to date.
You also have the option of transferring your current credits to a similar program at another institution. Though this course of action will prevent you from being eligible for a closed school loan discharge, you might still be able to obtain debt relief due to the law of borrower defense to repayment. (See below.)
If you believe that you have been the victim of fraudulent practices by Corinthian schools, such as the misrepresentation of job placement rates by Heald College, then you could be eligible for the Department of Education’s program of loan forgiveness based on borrower defense.
For enroll in this program, you need to submit materials supporting your allegations of fraud. While your claim is being reviewed, your student loans will be placed in a state of forbearance. You won’t have to make any payments, though interest will continue to accrue. Also, any collections efforts on defaulted loans will cease.
For further information about these options and how to pursue them, the US Department of Education has set up a special debt relief information page for former Corinthian students.
Help If You Were A Student of Other Colleges
If you’re not a former Corinthian student but have experienced a similar situation, then there’s potential help for you, too.
If your school closed while you were still working toward your degree, then you may request a federal loan discharge. You will need to prove:
- You were enrolled in the school within 120 days of closing,
- You did not complete the coursework necessary to finish your program, and
- That you haven’t since transferred to a program at another institution.
You’re ineligible either if you’ve transferred your credits to a comparable institution to continue pursuing your degree or if you enrolled in a teach-out program, which allows students in a school due for closure to complete their studies before closure is official.
You can find information about applying for a closed school discharge at the Department of Education’s website.
If you completed your degree but your school was closed due to fraudulent practices, or you believe that the school was guilty of committing fraudulent practices, then you could be eligible for loan forgiveness based on borrower defense.
To apply for this allowance, you’ll need to complete an attestation form describing your claim. While your claim is being processed, your loans will be placed in forbearance, which means that won’t need to make regular payments though interest will continue to accrue.
Ultimately, if your borrower defense claim is upheld, then your federal loans will be forgiven. However, you could still need to pay interest that accrued during the forbearance period. If your claim is denied, then you will be required to repay your loans, plus the interest that accumulated while the claim was being processed.
You can learn more about your options by calling the Department of Education’s borrower defense hotline at 855-279-6207. It’s open Monday through Friday from 8 a.m. to 8 p.m. Eastern Time.
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.50% APR (with Auto Pay) to 7.82% APR (with Auto Pay). Variable rate loan rates range from 2.43% APR (with Auto Pay) to 7.21% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 17, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/17/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.45% effective May 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.43% – 7.21%1||Undergrad & Graduate|
|2.43% – 6.65%2||Undergrad & Graduate|
|2.43% – 6.59%3||Undergrad & Graduate|
|2.44% – 6.87%4||Undergrad & Graduate|
|2.46% – 7.08%5||Undergrad & Graduate|
|2.93% – 9.67%6||Undergrad & Graduate|