Department of Education Kills Policy of Totally Forgiving Defrauded Corinthian Students' Loans

A new process looks at average incomes for specific programs to determine whether student loans should be fully or partially forgiven.

The U.S. Department of Education revealed new loan forgiveness standards for students who were defrauded by the for-profit Corinthian Colleges. Now, under the revised procedures, students might not get full forgiveness of their federal student loans. Instead, the discharge process looks at a borrower’s income to determine whether the loans should be fully or partially forgiven.

Students who have the lowest earnings compared to their peers—those who earn less than 50% of their peers—will still get full loan forgiveness, while borrowers with higher earnings get partial loan forgiveness. For example, say you attended a nursing program at Corinthian and you’re earning less than 50% of what the average income is for graduates of similar programs. Under the new process, your entire loan will be forgiven. However, students who earn 50% or more of their peers will get proportionally tiered relief to compensate for the difference. According to a table published by the Department of Education, a student who makes 70% of a peer's income would get 30% loan relief, while a student making 90% of a peer's income would get only 10% loan relief.

Effective Date: December 20, 2017