California Attorney General Xavier Becerra has announced a settlement with Balboa Student Loan Trust that will provide $67 million in critical debt forgiveness and other much-needed relief for the 34,971 Californians who took out private student loans to attend Corinthian Colleges.
“In the coming weeks, thousands of defrauded Corinthian students will receive a letter in the mail informing them that their loans have been fully forgiven. We hope this delivers some measure of closure and peace of mind,” said Attorney General Becerra. “While this settlement is an important step forward, there’s still a long way to go. It’s now time for U.S. Secretary of Education Betsy DeVos to follow through on her end with the federal relief owed to defrauded Corinthian students on their federal student loans. At the California Department of Justice, we will continue to hold accountable those who would prey on America’s college students, their parents and their American Dreams.”
As a result of this settlement, former Corinthian students from throughout California will soon receive relief from their student loans. By designated market area (DMA):
In the Eureka DMA, 11 former students will receive relief.
In the Chico-Redding DMA, 100 former students will receive relief.
In the San Francisco DMA, 7,368 former students will receive relief.
In the Monterey-Salinas DMA, 465 former students will receive relief.
In the Santa Barbara DMA, 168 former students will receive relief.
In the Medford, OR DMA, 17 former students will receive relief.
In the Reno, NV DMA, 16 former students will receive relief.
In the Sacramento DMA, 3,995 former students will receive relief.
In the Fresno DMA, 1,091 former students will receive relief.
In the Los Angeles DMA, 23,473 former students will receive relief.
In the San Diego DMA, 192 former students will receive relief.
In the Yuma, AZ-El Centro DMA, 36 former students will receive relief.
In the Palm Springs DMA, 106 former students will receive relief.
Due to the settlement, Balboa will:
– Immediately halt all debt collections and forgive 100 percent of the remaining balances on each of the 34,971 private student loans that it currently holds, totaling $67 million in debt relief;
– Refund all payments made by Californians since August 1, 2017, totaling more than $500,000;
– Refund additional payments made prior to August 1, 2017, by Californians who received problematic debt-collection notices, totaling approximately $84,000;
– Be prohibited from engaging in future debt-collection misconduct; and
– Delete all negative credit reporting associated with these loans for students in California and around the country.
– The California Attorney General’s Office opened a formal investigation into Balboa in 2017, after learning that the company may have engaged in debt-collection misconduct with respect to some of its Corinthian loans.
That investigation led to the settlement.
Corinthian is a now-defunct, predatory for-profit school that intentionally targeted low-income, vulnerable individuals through deceptive and false advertising that misrepresented job placement rates and school programs, among other egregious misconduct. In 2013, the California Attorney General’s Office led the charge against Corinthian, seeking to put an end to abusive practices that left students with large amounts of debt and without the jobs Corinthian had falsely promised its degrees would provide. The California Attorney General’s Office ultimately obtained a $1.1 billion judgment against Corinthian.
Attorney General Becerra has relentlessly pursued relief and assistance for Corinthian students in California. Since taking office, he has announced an outreach program encouraging thousands of affected California residents to apply for federal loan cancellation and has filed a lawsuit against the U.S. Department of Education and Secretary DeVos for illegally withholding promised student loan debt relief for tens of thousands of former Corinthian students. Additionally, Attorney General Becerra announced a settlement against Aequitas Capital Management that provided more than $51 million in debt relief for Californians who attended Corinthian. In 2017, Attorney General Becerra sued Ashford University, another for-profit school, and its parent company Bridgepoint Education for unlawful activity against its students; that lawsuit is pending in Alameda County Superior Court.
A copy of the Balboa complaint and stipulated judgement is attached to the electronic version of this release at oag.ca.gov/news.