100 students refuse to pay their loans
NEW YORK (CNNMoney) — Dawn Thompson racked up $155,000 in student loans for a Corinthian College degree that proved worthless. Now she refuses to pay it off.
It’s a risky move, but she’s not alone. More than 100 of the now-defunct for-profit school’s students are taking the same stand. And the government is willing to hear them out.
The “debt strikers” are asking the federal government to forgive their loans because they were ripped off by the school.
On Tuesday, 14 of the strikers were scheduled to meet with reps from the Consumer Financial Protection Bureau and the Department of Education, which has the power to cancel the loans. Officials wouldn’t say what the agenda was for the meeting, and it’s not uncommon for the CFPB to meet with students struggling to pay off loans.
This is the first time the “debt strikers” have been acknowledged by the government.
“I believe every student from Corinthian College who was lied to should have their loans forgiven so they can to go a real school and get a real degree,” she told CNNMoney before Tuesday’s meeting.
Thompson, 49, earned a bachelor’s degree in paralegal studies from one of Corinthian’s online schools, Everest, in 2011. As a single mom of two young kids at the time, she enrolled at the school mostly for the convenience. She could log in online after work and still be home with her children.
But the wealth of job opportunities the school touted never transpired. So Thompson returned to the school to pursue a master’s in business administration, trying to make herself more marketable.
But the CFPB started investigating the for-profit school in 2012, so Thompson decided it wasn’t worth the money and dropped out. She now works as a bank teller.
Her story is similar to those of other Corinthian students. The school is being sued by the Feds for an alleged predatory lending scheme, preying on low-income students, and falsely inflating job placement numbers. It was largely sold off for parts last fall.
The government has already ordered about $480 million in debt relief for Corinthian students thanks to a deal it made with a company that’s acquiring some Corinthian campuses. The lawsuit is ongoing, and students could see even more debt relief.
For now, Thompson doesn’t know if she’s eligible for any relief under that deal.
Of her $155,000 in debt, Thompson owes about $120,000 in federal loans. Payments aren’t due yet on those, but they are on the $35,000 she has in private loans.
“I’m constantly worrying about being homeless, it’s always on my mind,” Thompson said.