California Attorney General Xavier Becerra announced on Friday that about $51 million in student loan relief will be coming to former California students of the now defunct Corinthian Colleges.
“Corinthian intentionally targeted low-income, vulnerable individuals through deceptive and false advertising that misrepresented job placement rates and school programs,” Becerra said in a written statement.
The settlement was part of a multi-state effort to wrest funds from bankrupt Aequitas Capital Management Inc., a company that helped Corinthian sign students up for private loans.
Becerra said the settlement will help about 38,000 Californians who still owe on loans taken out to pay for Corinthian classes.
The settlement is the latest chapter in a saga that began about a decade ago, when Corinthian Colleges skyrocketed in popularity as people who lost jobs during the recession flocked to the for profit colleges for technical training and degrees. But federal investigators found that Corinthian lied to students about the rate graduates found jobs. Those findings led the federal government to stop the chain from cashing federal student aid and loans. That led the Santa Ana based company to close its campuses in 2015.
Since then, non-profit companies and advocates have been helping thousands of students secure debt relief.
Last year, then California Attorney General Kamala Harris secured a $1.1 billion settlement against the bankrupt Corinthian company. The new settlement will add to that aid.
“On the whole, we’re happy," said Natalia Abrams, executive director of Student Debt Crisis. "But there is still [the fact that] it’s hard to calculate the pain these borrowers have felt and we fear that there are borrowers that will still go un-helped,” such as the ones who paid off thousands of dollars in loans before settlements were reached.
Finding students and getting them to come forward will be a challenge.
“A lot of times these students feel it’s their fault for not reading the small print,” said Rigel Massaro, a lawyer with Public Advocates. So state officials, she said, must work to try to reach as many former Corinthian students as possible. She praised an outreach program announced by Becerra earlier this year.
“We’ve got to make sure this money reaches those students and they’re able to access those funds. That will be the true test of whether we’ve remedied the wrong that Corinthian caused two years ago,” she said.