Corinthian College borrowers were promised immediate loan relief. They’re still waiting

The Biden administration in June promised complete relief for student loan borrowers from Corinthian College, a move that would affect some 500,000 people following the school’s fraud scandal. 

But since then, debtors tell The Hill that the process has been fraught with inconsistencies, confusion, finger-pointing and a lack of communication from the Education Department about their loan relief. 

Some borrowers and advocates worry that the program will take months if not years to kick in while the kinks are worked out between loan service providers and the administration. 

In June, Vice President Harris announced student-loan-debt relief for borrowers from Corinthian College, which shut down in 2015 for allegedly defrauding its students. 

The for-profit school had more than 100 Everest, Herald and WyoTech campuses across the U.S. before an investigation found the school was inflating job placement rates and lying to students about the ability to transfer credits. 

After its shuttering, Corinthian borrowers could apply for Borrower Defense to Repayment, which allowed some students to receive debt relief due to the school’s wrongdoing. 

Harris’s announcement, however, said that all Corinthian borrowers would get complete debt relief whether they applied for Borrowers Defense or not. 

The move was touted as a victory by the administration in the following months. 

Two days after the announcement, Education Secretary Miguel Cardona tweeted that Corinthian borrowers “had $5.6B in loans immediately forgiven.”  

But immediate forgiveness has been sporadic and the relief process has been confusing for the borrowers. 

In a Facebook group titled “Loan Discharge: Corinthian Colleges/Heald/Wyotech/Everest,” borrowers have aired their frustrations for months. 

Megan Caplan, a 34-year-old mother in the group who went to an Everest College, told The Hill she has received no communication from the Department of Education since the June announcement.  

She received a letter from her loan servicer in July saying her account was in forbearance, meaning she would not have to pay the loans, but has had no communication with them since.  

Other Corinthian borrowers who have been in contact with their loan servicers and the Department of Education say they’re met with finger-pointing and conflicting answers.  

Kevin, a 54-year-old who graduated from an Everest College, said “every time I call [my loan service provider], all they tell me is we have no information and we have to wait until we get information from the Department of Education.” 

Kevin applied for Borrower Defense in 2018. 

In a screenshot provided to The Hill, the Federal Student Aid Office told Kevin via live chat that it “sometimes can take weeks, months or years” before a Borrower Defense application is approved.  

In terms of a timeline for debt relief after the administration’s June announcement, the official said they did not have that information and “the discharge for Corinthian College is being done in waves.” 

Still, the effort has not been completely bungled.  

Some Corinthian borrowers have received loan relief. Some members of the Corinthian Facebook group said they logged into their student loan accounts one day to find their loans were forgiven — but with no notification.  

An attorney who works with student borrowers told The Hill they are seeing Corinthian borrowers who submitted Borrower Defense applications over the years get the debt relief first. 

But complications arise when Corinthian borrowers have not filled out the Borrower Defense application. The process becomes more complicated when information like borrowers’ identities, the kind of loans a borrower has and what refunds borrowers are eligible for need to be figured out, according to the attorney.  

Becky, a 41-year-old who went to Everest and is also in the Facebook group, told The Hill she did receive a letter from the Education Department notifying her that her loans were forgiven, but she remains unsure on how to get a refund.  

“I did call Navient and they told me to call the [Department of Education]. So I called them and they told me to call Navient,” Becky said when asked if she reached out to determine her eligibility. “Neither one knows anything.” 

The confusion between the loan servicers and the Department of Education is nothing new, according to advocates for student loan borrowers.  

“They’re both at fault. Student loan servicers are poor at their job and the Department of Education does not move with the urgency it needs to and it leads to more confusion among borrowers,” Braxton Brewington, press secretary for Debt Collective, told The Hill.  

Scott Buchanan, executive director of Student Loan Servicing Alliance, a nonprofit trade association, acknowledged a lack of communication from the department regarding guidance for student debt relief programs.  

Buchanan said the challenge has been working through “five different major announcements” with some programs undergoing “major changes.” 

In August, the administration announced at least $10,000 relief for all federal student loan borrowers making under a certain income. The administration also announced full debt relief for those who went to ITT Technical Institute, another institution that the Education Department found defrauded its students.  

“Working through all those logistics is very, very difficult,” Buchanan said. “We have to wait for the Department of Education to give specific guidance about how that forgiveness is going to be applied,” adding they have to be able to verify borrowers who are eligible for the forgiveness.  

Some advocates argue that servicers are not immune from poor communication, either.  

“Servicers need to do a better job at articulating the world as it is to borrowers,” Student Borrower Protection Center’s (SBPC) Executive Director and Managing Counsel Persis Yu told The Hill. “One of the things we’ve seen historically is that with these announcements, instead of saying something as simple as ‘we don’t know yet, we’re getting details,’ servicers will just routinely give bad information.” 

In a statement to The Hill, the Department of Education pointed to success in processing borrower defense applications and fixing the program “after the past administration failed to approve a single set of new findings over their entire tenure.” 

“In contrast, we’ve approved the most borrower defense claims of any administration, signing off on full relief for more than 1 million borrowers to receive a combined $14 billion in discharges, and ramped up our oversight by reestablishing the Office of Enforcement within FSA,” Under Secretary James Kvaal said. 

An Education Department official said 750,000 borrowers, who attended Corinthian Colleges, ITT Technical Institutes , and Marinello Schools of Beauty, were sent an email this week letting them know their borrower defense applications were approved and being processed. The borrowers were also told they will need to contact their loan servicer to see if they are eligible for a full refund on previous payments.

However, it is still unclear when the thousands of borrowers still waiting for relief will see it.  

The attorney who works with student borrowers said the department is most likely avoiding giving a set deadline. It has missed deadlines before when promising debt relief.  

In September 2021, a smaller group of 12,000 Corinthian borrowers were promised full debt relief in six months. Most of those borrowers have the relief now, but the department did not make the six-month deadline, according to the attorney.  

The attorney estimated it could take more than a year for some Corinthian borrowers to see their relief.   

Those who submitted Borrower Defense applications previously may see relief in the next couple of months, while those who didn’t apply might have to wait until as long as 2024.  

But some are more optimistic about the timeline.  

‘I don’t think years is a proper characterization,” Buchanan said. “I think for most of these borrowers within some sort of reasonable time here.” 

Some believe the wait would be more tolerable if borrowers received better communication.  

“If they were to share an expected timeline of when people should see that relief instead of having people check in the void every day when that will be actualized,” Brewington said. “There should just really be more communication between the Department of Education, borrowers and student loan servicers.” 

While they wait in limbo, frustration is building.  

An admin for the Facebook group described Corinthian borrowers as “angry” and “confused” about the whole situation.  

“Angry that their life is on hold due to the fraudulent debt,” the admin said. “Confusion with the other discharge announcements and the courts blocking” other student debt relief.  

“The Biden-Harris Administration will continue to stand up for borrowers who’ve been cheated by their colleges and clear the backlog created by the previous administration to ensure borrowers receive the relief they deserve,” Kvaal said.  

Updated 10:07 a.m.