California Dolphin: statewide California news

Call Kurtis Investigates: Student Debt Sticks Around Even When The College Shuts Down

SACRAMENTO (CBS13) – Husband and father of two, Nicholas Gordon says his career college went belly up during his first semester and the government took his tax refund to pay for an education he didn’t get.
Gordon enrolled at Heald College hoping to get an IT degree, but a month and a half in he found himself caught in the Corinthian College shutdown.
“I didn’t even finish my semester,” he said.
Heald shut down in April 2015 accused of fraud by the feds, leaving Gordon without an education and more than $7,000 in federal student loan debt.
“I didn’t get anything out of that loan,” he said.
In 2015, fraud forced several for-profit schools to close. But the Obama Administration said it would forgive federal student loans tied to fraud.
Gordon was not aware that he still owed money for the loan. He received an unfortunate surprise this tax season when the IRS garnished his federal tax refund of $5,129, saying he still owed on his student loan.
“I feel like they walked into my house and they went into my wallet and they took 5-grand from me,” said Gordon.
The money he says that he had planned to use for rent, a car payment, bills and to buy clothes for his growing kids.
“I broke down cause I didn’t know what we were going to do,” he said.
The Trump Administration’s Betsy DeVos rolled back the Obama’s Administration forgiveness plan. DeVos said they were concerned taxpayers would be forced to shoulder massive costs that may be unjustified; instead, they said the feds would only grant partial relief.
But students like Gordon got no relief at all and we left with massive debt.
Scott Valverde with California’s newly formed Office of Student Assistance and Relief (OSAR) admits the federal loan forgiveness program is complicated and it’s not automatic. Students must apply for it, something Gordon says he didn’t know.
OSAR’s state office opened in July 2017 to help people like Gordon navigate the process and apply for relief.
“And we are an advocate for them and making sure that they get that relief,” said Valverde.
The state also has a relief fund for students that attended for-profit colleges. The Student Tuition Recovery Fund now estimated at $27 million to help students who attended schools that shut down.
We’ve learned so far the state has paid students $4 million that were stuck in the Corinthian closure, Gordon is working to tap into that fund.
Fortunately, Gordon’s family stepped in to help with the expenses after the feds took his tax refund. He still hopes to earn that IT degree, someday.
We’ve learned The Federal Department of Education has discharged loans tied to nearly 9,000 Corinthian students totaling $120 million.  We asked the Department of Education how much was requested but have yet to get that answer.
The state says it’s paid out $80,000 to Corinthian students for the Student Tuition Recovery since this new office opened.
California’s Office of Student Assistance and Recovery
Phone: (888) 370-7589
Email: osar@dca.ca.gov
Website: http://osar.bppe.ca.gov

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