Department of Education in Hot Water over Continued Efforts to Collect Debts Held by Corinthian Students

Last week, Senator Warren sent a letter to the Department of Education drawing attention to some “unsettling” data:  Nearly 80,000 former Corinthian students who attended the now-defunct school at a time when the Department found the school was engaged in fraud—and who are therefore eligible to apply for federal debt relief—are currently in some form of debt collection with the Department. The government is even seizing benefits, including tax refunds and the Earned Income Tax Credit, to collect from more than 30,000 of those borrowers. The Senator called on the Department to “stand up for these students as it has promised to do for more than a year and immediately halt all collections on this debt.”

Perhaps a good place to start would be with Darnell Williams, a former Corinthian student in Massachusetts who sued the Department last week after the government seized his tax refund to collect on his student loan debt. The complaint alleges that at the time of the seizure, the Department was sitting on an application by the Massachusetts Attorney General asking the Department to discharge Mr. Williams’s loans and those of his peers.