In recent years the federal government has been furiously working to crack down on fraudulent for-profit colleges, universities, and other learning institutions. Though students of such organizations often do not obtain the education they were promised, they are frequently left with thousands of dollars in student loan debt. The federal government has put a program in place to help some students of such fraud, but has drawn criticism for not being very aggressive in spreading the word.
Corinthian College Fallout
Tens of thousands of former students of now defunct Corinthian College are eligible to have their student loans written off under a program announced by the Department of Education (DOE) in June 2015. Despite the potential financial relief such a program offers, according to published reports there have been relatively few students who have stepped forward to take advantage of the program.
Servicers not Instructed to Tell Students of the Program
Servicers of federally insured student loans have a duty to inform debtors of their repayment options, including any applicable debt forgiveness programs. The Department has reportedly not instructed student loan debt servicers to inform former Corinthian College students of the program it authorized over a year ago, leaving many to wonder what is the source of the holdup.
Scammers Step In
Not only does the delay in instructing servicers to inform students of their options cost the students as they continue to make their monthly payments, but students are also vulnerable to shady and fraudulent debt reduction and forgiveness companies that advertise to those who are falling behind on their loans.
The scam companies attract those who owe thousands of dollars in loans as a result of their time at Corinthian, and promise them that they can help the students get out of student loan debt for a fee. Ironically, the Department of Education’s announcement of the debt forgiveness program has been used by scammers to attract victims. As government officials fail to promote the debt forgiveness program, scammers have taken advantage by advertising themselves as advocates of students and as offering a way to access the DOE’s debt forgiveness plan.
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