A judge's ruling in a lawsuit against Corinthian Colleges could spell a huge payout for the Education Department (ED).
According to The Huffington Post, Judge Gary Feinerman ruled in favor of the Consumer Financial Protection Bureau (CFPB) in its lawsuit against Corinthian Colleges. Issued in Chicago, the ruling determined the for-profit school attracted more than 115,000 former students under false pretenses by using falsified job-placement statistics, violating federal law.
ED Secretary Arne Duncan, who is resigning, previously declared himself "thrilled" to shut down Corinthian Colleges in an interview with MSNBC's Chris Hayes. However, Duncan evaded questions about the debt forgiveness program established to help students left with useless credits.
Student loan borrower advocates have thus far not been pleased with the debt forgiveness program, which they claim requires too high a level of proof that applicants had their borrowing rights violated. But Judge Feinerman's ruling that Corinthian violated federal law could open the doors for a blanket forgiveness program.
"It would be smart, just and entirely appropriate for Secretary Duncan to cite this ruling as a strong basis for providing comprehensive debt relief for former Corinthian students," David Halperin, a Washington lawyer and former senior vice president at the Center for American Progress, told The HP.
The CFPB cited a provision that entitles student loan borrowers to have their debt forgiven if there was any wrongdoing or lying that led to the student taking out the loan.
"The Education Department can take this court order and say it compels us to wipe away these debts," Maura Dundon, senior policy counsel at the Center for Responsible Lending, told The HP. "I don't know why the department wouldn't do that. The department has serious responsibilities to these students it permitted to enroll in Corinthian's schools and incur so much debt."
