The
Consumer Financial Protection Bureau is continuing its fight against predatory
student lending. Yesterday, the CFPB and Department of Education announced that
they will release Zenith Education Group and its parent, ECMC Group, Inc., from
any possible liability for the actions of Corinthian Colleges, Inc., from which
they purchased more than 50 schools. In a win for student borrowers, Zenith and
ECMC will provide more than $480 million in loan forgiveness to Corinthian’s
borrowers as a part of the deal, resulting in an immediate 40-percent reduction
in outstanding loan balances, with no action required of the students.
In
addition, a number of collection tactics which Corinthian is alleged to use
will be off-limits. Students who owe outstanding balances will not be sued or
threatened with suits, and they will not be harassed for collection. ECMC also
has agreed to tell consumer reporting agencies to delete adverse information
from the students’ credit files.
According
to the CFPB, ECMC made significant commitments that will also benefit prospective
students—ECMC has agreed not to offer its own private student loans for at
least seven years, will provide students accurate information about job
prospects, and will institute a five business day cooling-off period for new
enrollees.
The Department of Education separately reached an agreement with
Zenith related to tuition reductions and refunds, among other things.
For more details about the release
and the CFPB’s action against Corinthian College, subscribe to the Banking and
Finance Law Daily.
