Dive Brief:
- Even as the U.S. Department of Education pushed for a slower bankruptcy process for Corinthian Colleges Inc., a judge on Wednesday signed off on a liquidation plan that could help students win a fight to discharge billions in federal student loans.
- Inside Higher Ed reports that the liquidation plan set aside $4.3 million in a special fund for former students, who can use it to file a lawsuit against the department or take other steps to get widespread debt relief.
- The department is working on new rules to guide the debt relief process, but in the meantime, students have to file defense against repayment claims individually.
Dive Insight:
When schools close because of financial insolvency, students are usually at the bottom of the pack when it comes to bankruptcy proceedings. A host of more powerful individuals and organizations are looking for their own money to cut losses. While individual students didn’t get payouts from this bankruptcy deal, the fund may help a wide swath of the former Corinthian student body down the line. It is still unclear whether they will have to actually go to court with the Department of Education, but the student committee’s attorney seems more than ready to do so.