Nine state attorneys general Thursday sent a letter to U.S. Department of Education Secretary Arne Duncan urging him to “immediately relieve borrowers of the obligation to repay federal student loans that were incurred as a result of violations of state law by Corinthian Colleges, Inc.”

The AGs – from California, Connecticut, Illinois, Kentucky, Massachusetts, New Mexico, New York, Oregon, and Washington – joined a group of Senators who also recently asked ED to forgive the federal loans owed by former students of Corinthian campuses.

A large portion of the private student loans owed by Corinthian student have already been forgiven. That was a concession made by student loan debt collector and guarantor ECMC Group, who closed on its acquisition of Corinthian in February. In a deal brokered by the CFPB, ECMC agreed to forgive some $480 million in private student loan debt initiated by a Corinthian subsidiary.

The nine AGs want the government to go further and forgive federal direct and federally-backed student loans.

Federal and state regulators and investigators launched numerous actions against Corinthian over its lending, funding, and debt collection practices. In July, the company and the ED agreed on a plan that would shutter a dozen Corinthian campuses and sell the remainder to third parties.

“These cases against Corinthian have unmasked a school that relentlessly pursued potential students — including veterans, single parents, and first-time higher education seekers — promising jobs and high earnings, and preying on their hopes in an effort to secure federal funds,” the attorneys general wrote. “These students deserve relief.”

It is not known how federal loan forgiveness would impact the Corinthian portfolio acquired by ECMC. The company did agree to major reforms of the lending program in conjunction with the transaction.

ECMC agreed to not offer its own private student loans to current and future students for a period of seven years. In addition, ECMC has agreed to refrain from certain debt collection practices, including the threat of lawsuit, on Corinthian loans it now owns. ECMC also agreed to remove negative information from student borrowers’ credit reports.


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