A.G. Schneiderman & Coalition Of Attorneys General Call Upon U.S. Department Of Education To Clarify Students’ Options Following Closure Of Corinthian Colleges, Inc.

NEW YORK – Attorney General Eric T. Scheiderman and 10 fellow state Attorneys General today sent a letter to U.S. Department of Education Secretary Arne Duncan expressing concern about information provided by the Department to students affected by the sudden closure of 30 colleges operated by Corinthian Colleges, Inc., including Everest Rochester in Irondequoit, New York.  Everest Rochester, which offered associates degree programs, closed abruptly on April 27, 2015, leaving its approximately 400 students, many burdened with student loans taken out over the course of their education, worried and confused about their options. The letter was co-signed by the Attorneys General of Connecticut, Hawaii, Illinois, Kentucky, Maine, Maryland, Minnesota, Missouri, New Mexico and Oregon.

“Everest Rochester students have invested significant time and hard work in their studies, and many have taken out student loans,” said Attorney General Schneiderman. “It is crucial that Everest Rochester students receive clear information from the Department of Education about their options, including their eligibility for student loan forgiveness.”

Current Everest Rochester students and those who withdrew shortly before the closure are eligible for “closed school” discharges (i.e., forgiveness) of their federal student loans.  However, students who choose to transfer credits to another school and complete their program of study lose their eligibility for such “closed school” discharges.  The Attorneys General letter to the Department requested that the Department warn students that they will lose eligibility for a “closed school” discharge of their federal loans if they transfer their credits.  The letter also requested that the Department send “closed school” discharge applications to eligible Corinthian students, rather than require the students to jump through hoops just to acquire the application.  

The Attorneys General letter also urges the Department to provide debt relief to students who do not qualify for a “closed school” discharge but were harmed by misconduct by the school.  The letter asserts that such students should be permitted to raise Corinthian’s misconduct as a defense to repayment of their student loans.  The letter further urges the Department to provide clear guidance to students on how to assert a claim for relief.

In addition, the Attorneys General letter expresses concern that a list of transfer options provided to students by the Department includes some colleges outside of New York State that are under investigation by federal and state agencies.  The list of transfer options also includes schools that have been identified by the Department as having possible financial problems.  The Attorneys General urge they be removed.

Information for Everest Rochester students is included below:

Federal Loan Discharge (Forgiveness)

• You may qualify for a “closed-school” discharge of your federal loans.  To be eligible, you must be either:
  • enrolled on the date that the school closed;
  • on an approved leave of absence on the date the school closed; or
  • in most cases, have withdrawn from the school within 120 days of the school’s closure.  If you withdrew more than 120 days prior to the closure, you may also be eligible if the U.S. Department of Education determines that “exceptional circumstances” apply, such as the violation of state or federal law by the school.  The Department has not yet indicated whether an “exceptional circumstances” exemption will apply to Corinthian students.
• How to obtain a federal “closed school” loan discharge:
  • Loan discharges are not provided automatically.  You must submit an application to your federal loan servicer. 
  • If you do not know who your servicer is, call 1-800-4-FED-AID or log in to My Federal Student Aid. 
  • Some servicers make “closed-school” discharge applications available on their websites.  If yours does not, call to request an application.
• Parent PLUS loans may also be eligible for “closed-school” discharges.
• You will not be eligible for a “closed school” discharge if you choose to transfer credits to another school and complete your program of study. 
• If you graduated or withdrew more than 120 days before the school’s closing, and so you do not qualify for a “closed school” discharge, you may be able to assert a defense against repayment of your federal loans if your school violated state law and certain other eligibility requirements are met.  The Department is expected to provide additional information in the near future about how students can assert defenses to repayment based on a school’s violation of state law. 

To read the entire letter from the state Attorneys General to Sec. Duncan, visit here.