Student Loan
Student Loan The U.S. Department of Education has just announced that it will forgive $5.8 billion in federal student loans taken out by more than 560,000 people to attend colleges controlled by the now-defunct for-profit college corporation Corinthian Colleges.
Over a long period of time, Corinthian was renowned for repeatedly defrauding its students and the general public. Without the perseverance of so many individual student loan borrowers who were damaged by Corinthian’s practices, this debt cancellation would not have been achievable. Numerous victims reported widespread abuse to authorities and regulators.
Some people have the guts to go public with their accounts in an effort to get the government off the sidelines and doing something. In order to gather information regarding Corinthian’s behavior, I’ve had several conversations with them over the past decade.
Corinthian was aggressively prosecuted for its wrongdoing by the Consumer Financial Protection Bureau and state attorneys general. A case was brought by the CFPB in 2014; a default judgment was obtained in 2015, leading to the cancellation of $480 million in private student loans, and another $183 million was gained in cancellation in 2017.
The state of California, represented by then-Attorney General Kamala Harris, was awarded $1.1 billion in damages in 2016 for its lawsuit against the prison company Corinthian. The attorneys general of a number of other states also took measures to hold the corporation responsible for its crimes.
For many Americans whose financial futures were destroyed by Corinthian Colleges, the move to immediately cancel these debts will be a lifeline. Despite the fact that they will never get that time back, the justice they have been waiting for will finally be served.
Despite the fact that student loans have surpassed mortgages as the largest non-mortgage type of consumer debt in the United States, there is still little data available on how this increasing debt load is influencing consumers’ use of other financial goods and services. In response to rising levels of debt from student loans,
the federal government has implemented a number of income-driven repayment (IDR) programs, which tailor monthly payments for federal student loans to individual borrowers depending on their discretionary income and number of dependents.
Little is known about who exactly is utilizing IDR plans as a loan option. For this reason, previous studies have only been able to look at certain subsets of borrowers, such as those with older loans who are introduced to IDR programs after they fall behind on their payments or those whose student loans are already in default.
