If you attended Everest College, Everest Institute, or Everest University at any point between 1995 and 2015, your federal student loans from that time have almost certainly already been canceled. The Everest College lawsuits, brought by the California Attorney General, the Consumer Financial Protection Bureau, and former students themselves, established that parent company Corinthian Colleges defrauded students through fake job placement numbers and predatory recruiting. On June 1, 2022, the U.S. Department of Education responded by approving a group discharge that erased $5.8 billion in federal student loans for roughly 560,000 people who attended any Corinthian-owned school, including every Everest campus.1Department of Education, group discharge announcement, June 1, 2022
Who Qualifies for the Everest Loan Discharge
The June 2022 discharge covers anyone who enrolled at an Everest College, Everest Institute, Everest University, Heald College, or WyoTech campus between the company’s founding in 1995 and its closure in 2015. It applies whether you graduated, dropped out, or transferred. It does not depend on which program you studied or which campus you attended.
Three types of federal loans are covered:
- Direct Loans
- Commercially held FFEL loans
- Parent PLUS loans
Along with canceling the balances, the Department committed to deleting adverse credit history tied to these loans, restoring federal student aid eligibility for borrowers who had defaulted, and refunding payments already made on Direct Loans and Department-held FFEL loans.
What You Need to Do
Nothing, in most cases. The discharge is automatic. You do not need to submit a borrower defense application, prove you were defrauded, or ask your loan servicer to apply it. The Department did recommend, however, that former Corinthian students contact their loan servicer to make sure current contact information is on file. That matters especially if you are owed a refund check for payments you already made.
If years have passed and you are not sure whether your loans were discharged, checking your account at your servicer or on the federal student aid site is the fastest way to confirm.
What the Lawsuits Found Everest Did
The fraud that triggered all of this cut across nearly every part of Corinthian’s operations. Investigations by the California Attorney General, the CFPB, the Department of Education, and the Department of Justice found:
- Job placement rates were fabricated. Corinthian paid temp agencies to briefly hire graduates so they could be counted as “placed,” and it counted people in jobs they held before enrolling. One 2011 accounting graduate was listed as successfully placed based on a Taco Bell food service job she had held since 2006. A Texas Everest campus admitted falsifying employment records for 288 graduates over four years. The California Attorney General found placement rates had been inflated by as much as 37 percent.2California Attorney General 2007 findings
- Recruiters were trained to target “isolated,” “impatient,” and “low self-esteem” prospects, particularly single parents near the poverty line, and were told to sell programs rather than advise students or answer questions about cost.
- Credits from many Everest and WyoTech campuses were not actually transferable to regionally accredited schools, despite what recruiters told prospective students.
- Veterans were misled. Corinthian collected $186 million in Post-9/11 GI Bill benefits between 2009 and 2013, with recruiters signing emails as “Pentagon Advisors” and falsely claiming the Department of Defense recommended the schools.
- Corinthian also ran an in-house private loan program called Genesis, charging interest rates above 14 percent. More than 60 percent of Genesis borrowers defaulted within three years.
In June 2015, the Department of Education fined the company $30 million for “substantial misrepresentation,” identifying 947 instances of placement misstatements at Heald College alone.3Department of Education 2015 findings
The California Attorney General’s $1.1 Billion Judgment
In October 2013, then–California Attorney General Kamala Harris sued Corinthian for securities fraud, consumer fraud, and violating a 2007 injunction that had already barred the company from deceptive recruitment advertising. Harris called the company “a predator of some of the most vulnerable people in our community.”4California AG complaint, October 2013
By the time the case reached judgment, Corinthian had collapsed. In March 2016, a San Francisco Superior Court judge entered a default judgment: $820 million in restitution for former students and $350 million in civil penalties, for a total of $1.1 billion.
The CFPB Case Over Genesis Loans
On September 16, 2014, the Consumer Financial Protection Bureau sued Corinthian in the U.S. District Court for the Northern District of Illinois, calling the Genesis program an “illegal predatory lending scheme.” The complaint described students being pushed into high-interest loans on the strength of fake placement numbers, then pressured while still enrolled with tactics like blocked computer access and campus bans.5CFPB v. Corinthian Colleges, N.D. Ill., September 16, 2014
A federal court entered a default judgment for more than $530 million. Separately, the CFPB secured $480 million in Genesis private-loan debt relief for students.
The Class Action That Forced Full Relief: Calvillo Manriquez v. DeVos
The 2022 group discharge did not happen on its own. For years after the Department of Education acknowledged Corinthian’s fraud, the government was still collecting on former students’ loans and offering only “partial relief” based on a formula that relied on secretly obtained Social Security earnings data.
In 2017, former students, represented by the Project on Predatory Student Lending, filed Calvillo Manriquez v. DeVos in the U.S. District Court for the Northern District of California. In May 2018, Magistrate Judge Sallie Kim issued a preliminary injunction ordering the Department to stop collecting on the covered borrowers’ loans, finding that the partial-relief methodology likely violated the federal Privacy Act.6Calvillo Manriquez v. DeVos, preliminary injunction, May 2018
The Department did not fully comply. On October 24, 2019, Judge Kim held Secretary of Education Betsy DeVos and the Department in civil contempt, saying there was “no question” the injunction had been violated. The Department admitted that servicers had incorrectly billed 16,034 students and parents; 3,289 had made payments, and 1,808 had wages, tax refunds, or other benefits garnished. The court ordered a $100,000 fine and monthly compliance reports.7Calvillo Manriquez v. DeVos, contempt order, October 24, 2019
In March 2021, under Secretary Miguel Cardona, the Department rescinded the partial relief formula. The full group discharge followed the next year.
A parallel class action, Pratt v. Cardona, filed in June 2020 on behalf of about 13,000 borrowers who received only partial or no relief under a December 2019 rule, was voluntarily dismissed in November 2021 after the Department agreed to grant 100 percent debt relief to affected borrowers, canceling roughly $140 million more.
If the Federal Discharge Doesn’t Cover Your Losses
The 2022 discharge wipes out federal loans, but some former Everest students paid in other ways. If you took out a Genesis private loan, that debt was addressed separately through the CFPB’s $480 million relief agreement rather than the 2022 discharge; check with the entity servicing any remaining private balance.
If you paid tuition out of pocket, or if you believe you were defrauded in a way not covered by the Department’s specific findings on job placement, the borrower defense to repayment application remains available through the Department of Education. By 2022, more than 100,000 individual borrower defense applications from former Corinthian students had already been approved.
In California, the Student Tuition Recovery Fund exists to reimburse students for out-of-pocket tuition losses when a school closes or engages in misconduct. Local legal aid offices in states with Everest campuses have also helped former students pursue recovery of payments the federal discharge does not reach.