[Updated (6/25/2015, 4:18 p.m.) with further details from the department’s conference call with reporters on Thursday.]
The U.S. Department of Education has appointed a “special master” charged with overseeing the discharge of student-loan debt racked up on campuses of the now-defunct Corinthian Colleges Inc. The official, Joseph A. Smith, has overseen several large financial settlements the federal government has had a hand in, including the National Mortgage Settlement, which was undertaken as a response to the 2007 subprime-mortgage crisis.
“This is uncharted territory for the department, and we are glad that Mr. Smith will be helping us,” said Ted Mitchell, the under secretary of education, in a news release. “He brings tremendous experience to this process, and is committed to working on behalf of students.”
Mr. Smith’s recommendations as special master will largely determine the details of the discharge process, including how many students will qualify to have their loans forgiven and how much of the bill will be footed by taxpayers. According to the news release, Mr. Smith will issue a report on loan-discharge policy “at the end of the summer.” The department will then grant discharges to former students.
In a conference call with reporters on Thursday, Mr. Smith said the process would take time. “I feel it is very important to interact with all the stakeholders in this issue … I do intend, and I say these words knowing I’ll be held to them, to report regularly — and I hope in a helpful way — on our progress.”
On the same call, Mr. Mitchell said that, as of Tuesday, the department had received 4,500 requests from students whose colleges had closed to have their loan debt discharged.
The Obama administration’s loan-forgiveness program was prompted by the collapse of Corinthian Colleges, which was triggered by stricter financial scrutiny imposed by the department.
