Biden Admin Cancels $5.8B in Student Loans for Corinthian Colleges Students
Some 560,000 student loan borrowers who attended the now-defunct for-profit colleges will see their balances cleared.
- The move marks the largest federal action taken against a for-profit system to date.
- It is also the largest single debt forgiveness action taken by the federal government.
- Former Corinthian Colleges students won't need to do anything to receive relief.
The Department of Education (ED) Wednesday announced the largest student loan debt discharge in U.S. history.
All remaining federal student loan debt for any student who attended a Corinthian Colleges-owned school between 1995 to 2015 will be canceled, according to a statement from the department. That relief is expected to total $5.6 billion in loan forgiveness for 560,000 borrowers.
Former students won't need to apply for the relief or file a borrower defense claim, ED said. All cancellations will be automatic.
"For far too long, Corinthian engaged in the wholesale financial exploitation of students, misleading them into taking on more and more debt to pay for promises they would never keep," Secretary of Education Miguel Cardona said in a statement.
The for-profit Corinthian Colleges was founded in 1995 and ceased operations in April 2015. At its peak in 2010, the company enrolled more than 110,000 students at 105 campuses, according to ED. It also owned and operated the Everest, Heald College, and WyoTech campuses.
“This blanket loan forgiveness is likely the final step in a saga that began in 2013 when then-California Attorney General Kamala Harris sued Corinthian for misrepresenting students' job prospects and for false and deceptive advertising.”
This blanket loan forgiveness is likely the final step in a saga that began in 2013 when then-California Attorney General Kamala Harris sued Corinthian for misrepresenting students' job prospects and for false and deceptive advertising.
A judge ruled against Corinthian in 2016 — which had already closed its campuses and filed for bankruptcy at that point — and awarded a $1.1 billion judgment against the for-profit school system.
This isn't the first time ED has provided relief to former Corinthian students. ED has continually announced newly approved relief based on borrower defense claims. Most recently, it announced $284.5 million in discharges to over 11,900 students who attended institutions including Corinthian Colleges and Marinello Schools of Beauty in February.
The recent announcement is unique in that even those who don't file borrower defense claims will have access to relief.
To date, ED said it had processed claims for approximately 100,000 former Corinthian students.
President Joe Biden's administration has canceled $7.9 billion in federal student loans for 690,000 borrowers through borrower defense claims since taking office in January 2021, ED said. That sum includes this recent Corinthian discharge.
According to the statement from ED, the department expects to discharge loans over the coming months.
Biden's borrower defense policies and discharges are not earning widespread bipartisan support, however.
ED recently proposed language that would expand what would qualify as a successful borrower defense claim in December. The language has not been finalized yet, but Republican members of the U.S. House Committee on Education and Labor sent a letter to the Department of Justice on May 27 asking the DOJ to resist ED's proposal.