The nonprofit organization taking over dozens of Corinthian Colleges campuses has agreed to forgive $480-million in private student loans, clearing the way for federal approval of the sale, The Wall Street Journal and the Associated Press write. ECMC Group, a nonprofit student loan guarantor, announced a $24-million deal in November to purchase more than half of commercial firm Corinthian's 107 career schools.
Forgiving 40 percent of the principal balance on Corinthian students' loans was one of several concessions the U.S. Consumer Financial Protection Bureau sought before the government would approve Oakdale, Minn.-based ECMC's takeover of more than 50 campuses. The federal agency filed suit against Corinthian in September, alleging that the company misrepresented students' future job prospects to lure them into high-cost loans.
The agreement releases ECMC from any liability stemming from Corinthian's allegedly illegal loan practices. Zenith Education Group, a new ECMC unit created to run the schools, has pledged to cut tuition by 20 percent and agreed to hire an independent monitor of recruiting practices.