The slew of problems caused by this situation will drag on for months.

Trevor McGuire of See Thru Edu points to a piece by Paul Fain of Inside Higher Ed.

Debt Forgiveness and Liquidation

(from Inside Higher Ed):

By Paul Fain

The messy dismantling of Corinthian Colleges is moving through a federal bankruptcy court, as a judge mulls whether to halt loan repayments for up to 350,000 former students and the defunct for-profit chain seeks the court’s approval for the fire sale of its remaining assets – including trademarks, furniture and even old diplomas and typewriters.

Last month the U.S. Department of Education released a plan for Corinthian students to seek to have their debt erased.

As a result, the roughly 15,000 students who in the last year attended the 28 Corinthian campuses that shut down in April are eligible under the department’s closed-school loan discharge policy. ECMC, a nonprofit student loan guarantor, purchased most of the rest of Corinthian, creating the new Zenith Education Group to run it.

And, in an unprecedented action, the feds also said students who feel they were defrauded by their Corinthian campus, or that their campus broke state laws, can apply for debt forgiveness.