Student loan debt collector and guarantor ECMC Group Tuesday completed its acquisition of much of the campus network formerly owned by for-profit operator Corinthian Colleges. The controversial deal, announced late last year, will go forward with a number of concessions and restrictions announced today by the CFPB.
Corinthian is the embattled former operator of more than 100 for-profit college campuses in the U.S. and Canada. Federal and state regulators and investigators launched numerous actions against the company over its lending, funding, and debt collection practices. In July, the company and the Department of Education (ED) agreed on a plan that would shutter a dozen Corinthian campuses and sell the remainder to third parties.
ECMC stepped in and agreed to acquire 56 Everest and WyoTech campuses from Corinthian Colleges Inc. and transition them from for-profit to nonprofit status. The total purchase price is $24 million.
But Congressional leaders and regulators were very concerned with the plan and sought assurances that ECMC would restructure the business as it promised.
The CFPB today said that the group is forgiving some $480 million in private student loan debt initiated by a Corinthian subsidiary. These students will see an immediate 40 percent reduction in the amount that they owe on outstanding private student loans. The loan program at Corinthian was the target of a CFPB lawsuit last year.
As such, ECMC has 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.