The CFPB Just Got Some of Your Crap Student Loans Eliminated

It blows my mind the number of people that work hard every day to try and eliminate the Consumer Financial Protection Bureau. The CFPB does a lot of good work to otherwise help protect consumers who would not get relief.

Without the CFPB there would not be anywhere as near as many settlements that have benefitted consumers like you.

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Without the CFPB you’d have to hope the good people at the FTC or you state Attorney General office, who are overloaded and underfunded, would be able to tackle such big financial issues. That’s just not a reality.

Yesterday the CFPB announced a settlement with Aequitas Capital Management over, let’s call them what they were, BS loans to Corinthian College students. The CFPB states these private student loans were funded or purchased by Aequitas. The CFPB alleges ” both Aequitas and Corinthian knew was high-priced debt with a high likelihood of default, which students had no way of knowing was only for a sham tuition charge solely to gain access to Title IV funds.”

Those Title IV funds are the holy grail of making obscene profit by selling education. That is the pipeline to massive amounts of federal student loans that plop people in generational debt.

The CFPB says “Corinthian students, however, were never told that the portion of tuition funded by the Genesis Loans, as well as the loans themselves, were a sham to get access to federal funds. Indeed, Corinthian students were the ones left holding the bag, often with expensive debt that many would not be able to repay.”

So let me keep this bathroom reading short for you. Aequitas got caught marking crap loans. They were not the only ones doing this. In fact in another suit filed by the Illinois Attorney General, Navient is alleged to have done something similarly nasty as well.

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As part of the CFPB action announced, Aequitas will:

  • Forgive Genesis loans in connection with certain closed schools: Aequitas would forgive all outstanding balances on Genesis loans for borrowers who meet certain eligibility requirements. Eligible borrowers are those who did not complete their coursework or graduate and were enrolled at schools Corinthian announced in April 2015 would be closed; those who withdrew from those schools on or after June 1, 2014; and those who did not complete their coursework or graduate and were enrolled at the schools Corinthian sold to Zenith Education Group that subsequently closed.
  • Forgive Genesis loans in default: Aequitas would forgive all outstanding balances for any Genesis loans it owns that were 270 days or more past due as of March 31, 2017.
  • Reduce all other Genesis loans by more than half: On all other Genesis loans it owns, Aequitas would reduce the principal amount owed as of March 31, 2017 by 55 percent, and would forgive any accrued and unpaid interest, fees, and charges that were 30 or more days past due as of March 31, 2017. Borrowers could opt to have their monthly payments lowered after the remaining loan balance is reduced by 55 percent. Borrowers would receive a notice of this option, along with an explanation of the costs and benefits of this option versus maintaining their previous monthly payment amount.

If the proposed settlement is approved by the court, eligible borrowers will be notified within 90 days after approval. To ensure that they receive this notice, all borrowers should make sure their loan servicer has their current address.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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