Federal regulator says $480 million in private loans for Corinthian students will be forgiven

Lifestyle and Budget Associated Press

A federal regulator says Corinthian College students will be forgiven a total of $480 million in loans because the for-profit school used "bogus" job prospects to persuade them to pay tuition with expensive private loans.

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The Consumer Financial Protection Bureau says tens of thousands of students received the loans, though it's unclear how many will benefit from the forgiveness. More than 60 percent of Corinthian students with those loans defaulted within three years after being subject to interest rates that were roughly twice the rates for federal loans.

"These consumers were lured into high-cost loans destined to default and then targeted with aggressive debt collection tactics," said CFPB Director Richard Cordray.

He said the loan forgiveness should help current and former students.