(Extensions of Remarks - July 23, 2015)

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[Congressional Record Volume 161, Number 116 (Thursday, July 23, 2015)]
[Extensions of Remarks]
[Pages E1122-E1123]
From the Congressional Record Online through the Government Publishing Office []

                     STUDENT TAX RELIEF ACT OF 2015


                           HON. JIM McDERMOTT

                             of washington

                    in the house of representatives

                        Thursday, July 23, 2015

  Mr. McDERMOTT. Mr. Speaker, I rise today to introduce the Student Tax 
Relief Act of 2015. This bill is meant to help the students who 
attended Corinthian Colleges, Inc.
  The legislation is designed to help students affected by the sale of 
53 Corinthian College Inc., campuses to Zenith Education Group, a 
subsidiary of Education Credit Management Corporation (ECMC). It will 
also help students who get debt relief as a result of a successful in 
asserting in defense against repayments.
  My bill, at the time of introduction, has 23 original cosponsors and 
has the support of nine outside organizations--American Federation of 
Teachers (AFT), AFL-CIO, Campaign for America's Future, Consumers 
Union, National Education Association (NEA), New York Students Rising 
(NYSR), One Wisconsin Now (OWN), Young Invincibles, Student Debt 
  Corinthian Colleges, Inc. was the parent of several private, for-
profit institutions of higher education, the Everest Institute, Everest 
Colleges, Heald Colleges, and Wyotech Technical Schools.
  The Zenith formed for the purpose of buying 53 campuses form 
Corinthian Colleges, Inc, and completed the purchase in 2015. As part

[[Page E1123]]

of the final agreement Zenith agreed to provide $480 million in debt 
relief on Genesis loans advanced by Corinthian Colleges, Inc. As part 
of the agreement Zenith forgave 40% of the principal balance on the 
Genesis loans.
  The servicers who are servicing these loans will write down the loans 
without a borrower needing to take any action.
  As many as 170,000 individuals may qualify for this reduction. Under 
the tax code, generally, discharged income becomes taxable income to 
the taxpayer. Therefore, the amount that is discharged from the Genesis 
loans will result in the borrowers having to pay increased taxes.
  However, this bill specifically prevents the amount discharged under 
the agreement between the Education Department and the Consumer 
Protection Financial Bureau from being included in gross income.
  According to the Congressional Research Service, ``Borrowers who 
attended a Corinthian Colleges, Inc. school that was purchased by 
Zenith and borrowers who attended a Corinthian Colleges, Inc. school 
that closed but who are ineligible for closed school loan discharge may 
seek debt relief on their Federal Family Education Loan or Direct Loan 
program loans by asserting certain defenses against repayment. In 
certain circumstances, borrowers of Direct Loan program loans may be 
able to assert as a defense against repayment of their loan `acts or 
omissions of an institution of higher education,' as specified in 
regulation. ED has determined in regulation that such acts and 
omissions are those that would `give rise to a cause of action against 
the school under applicable State law.' ''
  ``If the borrower's defense is successful, Education Department will 
determine the amount of debt relief to which the borrower is entitled, 
which can include relief from repaying all or part of the outstanding 
loan balance and reimbursement for previous amounts paid toward the 
  It is unknown how many individuals will ultimately end up using the 
Defense to Repayment provision, but the bill will provide tax relief 
for taxpayers who get their loans discharged under the Defense to 
Repayment provision. The bill will ensure that amounts discharged due 
to Defense to Repayment claims will not be considered gross income to 
the taxpayer.
  It is important that the students who attended Corinthian College 
Inc. schools and have suffered already not have to suffer anymore by 
paying extra taxes on loans that get discharged.