Around 41,000 students who enrolled in Corinthian College might be eligible for student loan relief. Aequitas Capital Management is an investment firm that was in charge of student loans for now-defunct Corinthian Colleges. However, the Consumer Financial Protection Bureau and 13 state attorneys proved that the company had resorted to predatory lending practices for for-profit colleges.
Both Corinthian Board and Aequitas Firm Were Aware of the High Probability for Their Predatory Lending Practices to End in Default
However, the settlement needs the approval of the U.S. District Court to enter into effect. Otherwise, the approximately 41,000 students who were influenced into wrongful borrowing contracts won’t receive the reimbursement of $192 million.
CFPB Director Richard Cordray stated that Aequitas Capital Management ruined the wonderful experience of all these students of higher education due to predatory lending practices. Student debt can have severe repercussionseven later in life. The governmental allegations pointed out at Corinthian board and Aequitas being aware of the damages their financial contracts would cause to students.
Most of the applicants had below average financial resources which would definitely translate into defaults once they started a college loan. According to the complaint, a 2013 marketing presentation that Aequitas held revealed a description of the ideal prospective borrowers. These would be persons with ‘low self-esteem’ and who are feeling ‘isolated.’
Obama Administration Brought the End of Corinthian College in 2015
However, all Corinthian Colleges closed down in 2015. Until then, the organization was the largest for-profit educational institution in the U.S. There were around 74,000 students who chose this organization as the ideal place for them to learn in-depth programs such as information technology or criminal justice. They were offered around 100 campuses under the brands of WyoTech, Heald, and Everest.
However, the Obama administration started investigating this for-profit organization. They found that the company was misleading prospective students into trusting them by exacerbating job placement rates for their graduates. Therefore, Corinthian received a fine of $30 million in 2015 which brought the end of it.
The recent settlement pardons all students who were enrolled at any Corinthian school in 2015 when the institution was closed down. On top of that, the debt forgiveness for the remaining amount will also extend to those who are now in default.
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