AG Grewal Joins Multi-State Coalition Supporting Former Students of Corinthian Colleges Seeking Loan Cancellation – State AGs Challenge Federal DOE Policy that Denies Defrauded Students Complete Relief

TRENTON – Acting to ensure that thousands of New Jersey residents who fell victim to the predatory practices of Corinthian Colleges receive full relief from the U.S. Department of Education (DOE), Attorney General Gurbir S. Grewal has joined a multi-state coalition of Attorneys General in filing an amicus brief in support of former Corinthian students who are now suing the DOE for student loan forgiveness.

The amicus brief, filed on Wednesday by lead state California in the U.S. Court of Appeals for the Ninth Circuit in a case known as Calvillo Manriquez v. DeVos, supports a lower court’s order enjoining the DOE’s practice of giving only partial relief to defrauded students. DOE has appealed the lower court’s ruling and seeks to limit defrauded students to relief on as little as 10 percent of their loan amounts.

“Corinthian Colleges left its students with significant debt and without the education and job opportunities they were promised,” said Attorney General Grewal. “Our message to Secretary DeVos and the Department of Education is that students who are misled and defrauded into taking out student loans should not be the ones who pay for their schools’ predatory conduct.”
Corinthian intentionally targeted low-income, vulnerable individuals through deceptive practices and false advertising that misrepresented job placement rates and school programs, among other misconduct.

In the wake of intense scrutiny by state and federal agencies, Corinthian abruptly ceased operations in 2015, and in March 2016, Corinthian became the subject of a $1.1 billion judgment obtained by the Attorney General of California.
After Corinthian’s collapse, the New Jersey Attorney General’s Office began working with DOE to contact former Corinthian students in New Jersey to advise them of their eligibility for cancellation of their federal student loans.

Approximately 2,200 New Jersey residents are eligible for federal student loan cancellation in connection with Corinthian’s fraudulent activity and closure.

Under Education Secretary Betsy DeVos, however, DOE stopped approving student loan relief applications from former Corinthian students and coordinating with state Attorneys General seeking to assist individuals obtaining relief.

In December 2017, DOE announced it would implement a new policy granting only partial relief to many student loan borrowers making such applications.

The plaintiffs in the Calvillo Manriquez lawsuit challenged the federal partial relief policy and sought an injunction from the district court to stop it. In granting a preliminary injunction, the district court barred DOE from carrying out its attempt to shortchange defrauded Corinthian students. The district court also halted collection efforts on federal direct student loans originating from Corinthian’s fraud.

This is not Attorney General Grewal’s first challenge to DOE’s attempts to make it more difficult for students to secure relief after falling victim to fraudulent or predatory conduct by for-profit colleges or other educational institutions.

In August of this year, Attorney General Grewal joined Attorneys General from 19 other states in opposing an Education Department proposal to change its regulations to limit students’ ability to obtain forgiveness on their federal student loans. In May, the Attorney General called on Secretary DeVos to collaborate on any open federal investigations of predatory conduct by for-profit schools, or instead share DOE files so that New Jersey can pursue any well-founded investigations that the federal government will not pursue.

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