35,000 former students of the now-defunct Corinthian College will receive student loan forgiveness.
California Attorney General Xavier Becerra recently announced that the state reached a settlement with Balboa Student Loan Trust on behalf of students who attended the defunct for-profit school Corinthian Colleges Inc. This means that nearly 35,000 former students will receive loan forgiveness; this is significant because private student loans are notoriously difficult to get discharged via forgiveness.
The Delaware-based company Balboa Student Loan Trust granted high-interest private loans to help students supplement their federal loans. The attorney general’s office began investigating Balboa last year on the allegations that the company participated in debt collection misconduct, The San Francisco Chronicle reported.
Corinthian College was a for-profit school that allegedly targeted low-income students, used misleading marketing tactics, and lied about its job placement rates. The company offered nationwide certificate and associate degree programs in a number of different fields.
At one time, Corinthian was one of the most successful for-profit chains in the country with more than 100 campuses in 25 different states. However, the company ceased operations and closed its campuses in 2015, leaving its 110,000 students in limbo.
The settlement with Balboa marks a major victory for students who have faced an uphill battle trying to have their student loans forgiven. In the lawsuit, lawyers accused Balboa of unfair debt collection practices. The company agreed to forgive all outstanding debt and settle for a total of $67 million.
Under the terms of the settlement, Balboa will end any debt collection practices for the remaining 34,971 loans they hold. The company also agreed to repay any payments made since August 1, 2017, for a total of $500,000.
They will also refund an additional $84,000 in payments made by Californians who received what the California AG called “problematic” notices from the company. And the company agreed to delete any negative credit reports they filed on former Corinthian students.
Balboa did not admit to any wrongdoing in the settlement. This isn’t the first settlement reached on behalf of Corinthian students; last year, Becerra reached a settlement with Aequitas Capital Management for $51 million in debt relief.
Becerra has been a huge proponent for former Corinthian students and encouraged them to apply to have their federal loans canceled. He even filed a lawsuit against the U.S. Department of Education for failing to grant loan forgiveness to former Corinthian students.
In a press release, Becerra celebrated the settlement with the private lender as an important first step but acknowledged that the fight isn’t over yet – the former students are currently awaiting word on whether they’ll get their federal student loans dismissed, too, according to The Student Loan Report.
“It’s now time for U.S. Secretary of Education Betsy DeVos to follow through on her end with the federal relief owed to defrauded Corinthian students on their federal student loans,” Becerra said in the press release.