The federal government on Monday announced sweeping measures — which might cost taxpayers $3.6 billion — to help ease debt for thousands of now financially and academically stranded students of the now defunct Corinthian Colleges.
For-profit Santa Ana-based Corinthian was at the center of fraud allegations when officials closed their last of 28 campuses in April — just weeks after the U.S. Department of Education issued a nearly $30 million fine for misrepresentation.
The chain’s more than 100 campuses once spanned across the United States and Canada, with hubs in Torrance, City of Industry, Ontario, San Bernardino and Los Angeles, with affiliate names such as Everest and WyoTech in California, Arizona and New York.
The closure left more than 16,000 students in the lurch, many just days away from graduating after going thousands of dollars in debt.
As part of Monday’s actions, the federal government announced it was extending the period of eligibility for students applying to discharge their federal student loans — asking for forgiveness, cancellation or discharge of their loans — back to June 20, 2014. Normally, the eligibility period to ensure that the students would no longer be expected to repay the loan would end within 120 days of the closing date.
Other forms of debt relief may cover students whose attendances goes back well beyond the new June 2014 cutoff.
Monday’s announcement covers students whose schools have closed, and students who believe they were victims of fraud, regardless of whether their school closed — some schools closed, but others opened under new owners, according to the government.
In addition, the Department of Education has worked with a group of organizations and institutions, including those within the Cal State University System, to establish an independent volunteer advising corps that will help students navigate their options.
Education Secretary Arne Duncan on Monday said the department has no way of knowing how many students will come forward and ask for help.
The department estimates that about $3.6 billion in federal loans were given to Corinthian students attending subsidiary schools including Everest, WyoTech and Heald.
Response was favorable from several legislators.
“I am pleased the (Education Department) has heard the calls from Congress as well as the thousands of affected students and is finally taking action to protect the countless individuals who were impacted by Corinthian’s collapse.” said Rep. Norma J. Torres, D-Pomona.
On May 21, Torres sent the Education Department a letter, signed by 15 other members of Congress, asking for a clear, efficient process for former students of Corinthian Colleges to apply to have federal loans forgiven.
In a statement, Sen. Barbara Boxer, D-CA., said, “I am encouraged that the Department of Education is taking steps to provide much needed assistance to thousands of students harmed by the failed Corinthian Colleges.”
News of the department’s actions had former Everest College nursing student Stephanie Talamentes, 26, of Covina, puzzled as to whether it might apply to her case.
But no matter how the federal assistance shakes out, Talamantes knew she is in a far better position than many Everest students on the Ontario campus, as she had been.
When the Everest campus closed in late April, Talamantes was to graduate in June.
School officials left her without guidance about how to complete the roughly two months of classes she lacked to get her associate’s degree in nursing, she said.
“They were absolutely no help,’ she said.
But with assistance of some former Everest faculty members and the state Board of Registered Nursing, Talamantes said she and her classmates, in a few weeks, will begin taking the courses they missed at San Joaquin Valley College, without additional fees.
By January, Talamantes said he expects to be working as an registered nurse.
But she is unclear if the grace period for student loans will be extended or whether any portion of her $50,000 in debt might be forgiven.
Craig Petinak, San Bernardino Valley College spokesman, said the school has received at least several calls from former Corinthian students.
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