CA Attorney General announces $67 million in debt relief for former Corinthian students

UPDATE 6/14/2018 5:15 p.m.: State Attorney General Xavier Becerra announced a multi-million debt relief program for thousands of students at for-profit colleges.

Thursday, he said his department had settled with Balboa Student Loan Trust, that will provide $67 million in debt forgiveness and other relief for nearly 35,000 Californians who took out private student loans to attend Corinthian Colleges.

If that name sounds family, it should. It’s the parent company of Wyotech, Everest College and Heald College, which used to be at North Main and Alvin Drive in Salinas.

In 2013, the Attorney General’s Office sued Corinthian Colleges for misconduct, misrepresenting job placement rates and transferability of credits.

“Corinthian was a predatory institution that now is shut down because of its fraudulent practices,” Becerra said. “Corinthian intentionally targeted low income vulnerable individuals, folks like me who were first in their family to have a chance to go to a university or college. They did so and they did these things through deceptive and false advertising.”

That suit led to the schools being shut down, yet students still had to pay back private loans.

Corinthian offered a student loan called “Genesis,” and Balboa had a chunk of those loans. The Department of Justice began investigating the company last year, finding it was engaged in illegal debt collection practices, including erroneously sending out overdue notices to borrowers. A settlement has since been reached.

“This settlement that we secured means that for those Corinthian College students, some 35,000 of them, Balboa will immediately stop collection actions against them and it will forgive 100% of that loan that those Corinthian College students took out,” Becerra said.

Some students will also get money back. Those are people who made payments since August 1, 2017, as well as those who got debt collection notices. All negative credit reporting will also be deleted. The people who will see this debt relief will get a letter in the mail, letting them know.

Of the thousands of students eligible for debt forgiveness, 465 of them are on the Central Coast.

April Lucas is one of the thousands of students who attended Heald College in Salinas.

She enrolled in the school hoping to create a better life for herself and her newborn daughter. Yet she said after she graduated, she felt unprepared and had a mountain of debt. She was one of the lucky ones compared to her classmates.

“A lot of them are working at 7/11 and McDonald’s and we were promised jobs and so much more security than that,” Lucas said.

She doesn’t know if she will get debt relief from her loans. She got $40,000 in federal loans to become a pharmacy technician. In the meantime, she’s moved on to something else that’s able to provide.

“Thankfully I’ve been able to get a decent job as a teacher’s assistant, and that’s how I’ve been able to stay afloat,” Lucas said.

Attorney General Becerra said he’s now waiting for the U.S. Department of Education to forgive federal student loans for students who were defrauded.

ORIGINAL POST: The California Attorney General Xavier Becerra will hold a press conference at 11:15 a.m. Thursday to announce a settlement that will provide $67 million in debt relief to Californians who attended Corinthian Colleges.

KION’s Mariana Hicks has the full story at 5 and 6 p.m.