March 31, 3015
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Corinthian Collective
Proposed Plan for Debt Cancellation
Synopsis
The current situation with Corinthian Colleges, Inc. reveals two major problems with the
Department of Education’s approach, both of which must be addressed. Corinthian students—
past and present—have received no relief on their federal student loans despite the Department’s
clear authority to provide such relief. Moving beyond Corinthian, the Department has set up no
process whatsoever to allow students to apply for Defense to Repayment or to otherwise initiate
debt cancellation for students who have been subject to illegal practices by their schools. Below
we propose a solution to each of these failures of regulation. The first section deals with the
situation of Corinthian students—it is to be initiated immediately. The second, to be put into
motion as soon as practicable, deals with the broader problem that Corinthian’s collapse has
uncovered.
Corinthian Student Debt Cancellation—Immediate Action
1. Consolidate the servicing of all the student loans of current and former Corinthian
students into a single servicer, preferably the Department of Education’s direct servicing
arm. Students’ ability to gain relief from predatory loans should not depend on who their
servicer is.
2. Use the discretionary power embodied in 31 U.S.C. § 3711(a) and in the Higher
Education Act (under to U.S.C. 1082(a)(6)) to erase all the outstanding obligations on
student loans of current and former Corinthian students and refund to these same students
the money they have already paid on these loans. Evidence of Corinthians’ systematic
abuses is now abundantly clear. Sorting through the individual Defense to Repayment
applications of all of the students would be unfair and wasteful.
3. Include Corinthian students and consumer protection advocates in deliberations
about how to resolve the situation with Corinthian moving forward. Corinthian and
ECMC have been the main voices that the Department has listened to in this process, to
students’ severe detriment. The Department makes decision after decision without
student input, even though these decisions affect students most profoundly. The disregard
the Department has shown for students’ interests evidences a clear remove from their
experiences.
A Fair Debt Cancellation Process for All Students—As Soon as Practicable
1. Set up a transparent and accessible Defense to Repayment process, including:
a. Promulgating clear unitary standards for which behavior of an institution of
higher education forms the foundation for a successful Defense to Repayment
claim. Relying on the intricacies of 50 states’ laws only generates wasteful
complexity. This new standard will ultimately require new regulations, but as a
bridging action the Department could issue guidance and/or choose to interpret
state laws as sharing a minimum standard of unacceptable behavior.

 Corinthian Collective Plan Proposed Plan for Debt Cancellation
March 31, 2015
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b. Creating an online application that can be readily filled out by pro se
students. Include students in the drafting of language for this form to ensure its
accessibility. We provide the online application that we created as an example of
what it could look like.
c. Setting up an adjudicative process for claims that is overseen by independent
Administrative Law Judges rather than any officials who have incentives (such as
making a profit on debt collection) other than seeing justice done.
d. Proactively notifying students of schools under investigation for wrongdoing
that the students may be eligible for Defense to Repayment and informing them
how to apply. Notice is a requirement of due process.
2. Begin affirmatively investigating trade schools. The Department of Education should
take responsibility for the behavior of higher education institutions rather than waiting for
other enforcement agencies with limited budgets and less expertise to investigate and
prosecute wrongdoing.
3. Create a process for affirmative class-wide erasure and refund of student loan debts
for students who have been subjected to a school’s systematic abuses. Students in this
situation should not have to individually apply for relief. This could involve creating
rules under 31 U.S.C. § 3711(d) or through the use of another statutory power. Possible
standards could include (1) relieving the student loan debts of all students for which a
proper state regulator petitions the Department; (2) relieving the student loan debts of all
students against whom the Department independently determines that there has been
sufficiently clear evidence of systematic abuse; or some other standard. The Department
could create an independent fact-finding process or the equivalent of a class-wide process
to determine wrongdoing. In considering possible regulations along this line, the
Department should include students and consumer advocates.
4. Include students in all future higher education rulemakings and guidance writing.
The influence of trade schools is clearly too strong in the Department. The Department is
removed from the experiences of students.