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