The Department of Education has agreed to suspend all judicial actions to collect on student loan debt from former Corinthian College students for 120 days, the student committee announced Monday.
In reaching an agreement with the agency, the committee said it has agreed to withdraw its motion that sought a court-ordered stay of collection efforts on all Corinthian student loan debt following the school’s collapse in May.
Corinthian College filed for bankruptcy and closed its campuses across the country after the Consumer Financial Protection Bureau and at least 20 state attorneys general, including California and Illinois, sued the school for making false and misleading advertisements to entice students to enroll and take out pricey loans to cover the cost.
The justice Department’s U.S. Trustee Program has given an ad-hoc group of former students permission to form a special committee to represent the students’ interests in the school’s bankruptcy case.
In the next 120 days, the student committee said it intends to work with the Education Department on furthering an approach that provide long-term relief for the estimated 500,000 students that have been impacted.
“While, in a perfectly just legal system, we would be eagerly announcing inclusive and sweeping relief, this agreement is an important step in the right direction as we work through a complex and massive bankruptcy to ensure that the rights and interests of Corinthian’s former students are protected,” Scott Gautier, an attorney with Robins Kaplan LLP that helping represent the student committee. “We are hopeful that this announcement sets the stage for greater relief on a collective basis in the not so distant future.”