Letter: End Delays for Predatory College Loan Cancellations

Attorney General Doug Chin and Office of Consumer Protection Executive Director Steve Levins joined 18 other state attorneys general to demand that the U.S. Department of Education ends long delays in its program to cancel federal student loans for thousands in Hawai‘i who were victimized by predatory for-profit colleges.

One of the colleges targeted is Corinthian Colleges Inc., which owned and operated Heald College campuses in Hawai‘i. After intense scrutiny by various government entities, for-profit Corinthian Colleges abruptly ceased operations in 2015.

The U.S. Department of Education found that while it was operating, Corinthian made widespread misrepresentations between 2010 and 2014 about post-graduation employment rates for certain programs at its campuses.

About 2,474 residents who attended programs at Corinthian schools received a letter in April explaining that they are eligible for streamlined federal student loan cancellation based on the U.S. DOE’s findings. The students were directed to fill out a short application for the U.S. DOE.

The Hawai‘i students were notified as part of a bipartisan effort by 47 attorneys general across the country to inform more than 100,000 former Corinthian students that they are eligible for streamlined loan cancellation.

However, former Corinthian students continue to experience delays in review and approval of their loan cancellation applications.

About 27,000 students nationwide who have already been approved for loan forgiveness have yet to see their loans discharged. Some students are nearing the end of 12-month forbearances on their loans, and face restarting monthly payments on debts that should be canceled.

“Students here in Hawai‘i have already been hurt by these for-profit colleges,” Attorney General Chin said. “The federal government should be protecting them promptly.”

In a letter sent Monday, June 5,  to U.S. Secretary of Education Betsy DeVos, Attorney General Chin urged the U.S. DOE to review the mounting applications and work to timely finalize the discharge of loans where forgiveness has already been approved. The letter was joined by 19 state attorneys general.

The letter presses DeVos to provide information on what the department is doing to rectify the growing backlog of applications and to provide a timeframe for discharge of the student debt. In addition, since the U.S. DOE has already determined that these students are eligible for loan forgiveness, the letter urges DeVos to abandon the application process and automatically discharge all eligible loans.

“Relieving these hard-working Americans of their fraud-induced student debt will free them to participate more fully in their local economies, or even continue their educations with reputable schools,” the letter explains.