Education Dept. names special master to help with debt relief plan for Corinthian students

WASHINGTON – The Education Department appointed a special monitor Thursday to help develop a debt relief program for students who attended the now-defunct Corinthian Colleges — a debt forgiveness plan that could cost billions of dollars.

Ted Mitchell, the undersecretary at the department, named Joseph A. Smith as the monitor, calling him “a distinguished advocate for consumers and taxpayers” who will guide a fair and efficient process.

Earlier this month, the department announced a plan to make it easier for students who attended Corinthian to seek relief for their federal loans. Corinthian, once one of the largest chains of for-profit colleges, nearly collapsed last year amid fraud allegations, and went bankrupt in May.

Smith has served as an independent monitor in other high-profile cases. He oversaw consumer relief obligations in a $13 billion settlement between the government and JPMorgan Chase.

About $3.6 billion in federal loans has been given to hundreds of thousands of Corinthian students since 2010, but officials say it’s unlikely that every loan will qualify for relief.

The Education Department had accused Corinthian of falsifying job placement data for its graduates and altering grades and attendance records. The department fined Corinthian $30 million in April.

On a phone call with reporters, Mitchell said the department has received about 7,000 applications as of this week for debt relief, mostly from Corinthian students. Some applications were received from students from other schools, but Mitchell did not say which ones.

Smith will issue a report at the end of the summer, with his initial findings and guidance for the department.