The tens of thousands of students seeking debt relief from the federal government after for-profit education chain Corinthian Colleges Inc. closed its Everest University, WyoTech and Heald College campuses, will have to wait a little longer, the Department of Education said Thursday as it provided an update on the number of federal student loans it has discharged and that are currently under consideration.

The Washington Post reports that the Dept. has received 4,140 claims for borrower defense discharge since it announced in June that it would provide relief for students who attended (after June 20, 2014) the 30 CCI campuses that closed in April.

Those reviews are taking longer than one might expect as the team has to analyze state laws for each claim.

Under the law, a borrower defense to repayment provides loan forgiveness to students if their school committed fraud or broke laws.

Independent monitor for the relief process, Joseph Smith, said during the press conference that his team of four attorneys is reviewing claims where the “facts and law are clear,” such as those who attended Heald Colleges in California, Hawaii and Oregon, the Post reports.

Nearly 1,992 claims are tied to those schools, which were the center of an April Dept. of Education fine against CCI for lying about job placement rates to students. Smith estimates that it could be at least three months before those claims are resolved.

As for students who attended other CCI closed schools, there is no specific timeline for settlement.

“One reason this is taking time is we’re trying to be careful about the basis to create classes,” Smith said. “But wherever we can, we will try to treat those claims alike.”

In addition to the borrower defense discharges, the Dept. announced it had received 7,815 claims for closed school discharges, 3,128 of which have been approved.

In all, those resolved cases involved about $40 million in federal student loans, the Post reports.

While students continue to wait for their claims to be reviewed, Business Insider reports that 7,000 have been placed in forbearance or stopped loan collection status. However, while the students aren’t currently making payments, their debts continue to rack up interest.

Ultimately, the Department says it has no idea how much it will cost to forgive the student loan debt of eligible former Corinthian students.

Since 2010, students at the schools have borrowers about $3.2 billion, so the Dept. of Education’s tab could be significant.

“We’re identifying a number of issues, a number problems, with the law and regulation that we hope to square away so that we can better protect students,” Education Under Secretary Ted Mitchell said. “This is something we hope to take up with Congress.”

The review panel’s next progress report is expected to be released in mid-October.

It may be a long time before many Corinthian students get debt relief [The Washington Post]
The US is forgiving $40 million in student debt taken on by thousands of students [Business Insider]

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