The Biden administration will officially announce today that it would be canceling $5.8b in student loan debt for former Corinthian Colleges students, first reported by The Hill. It will be the largest discharge of student loan debt in the U.S. Department of Education’s history.
This action will impact roughly 560,000 former students and automatically apply to former students from defunct colleges under Corinthian, including Everest, Everest College Phoenix, Heald College, and WyoTech. Sixteen Democratic lawmakers wrote a letter to Education Sec. Miguel Cardona in March, requesting an updated timeline to see when former Corinthian College students would receive student loan forgiveness.
“As of today, every student deceived, defrauded and driven into debt by Corinthian Colleges can rest assured that the Biden-Harris Administration has their back and will discharge their federal student loans,” Education Secretary Miguel Cardona said. “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.”
Corinthian Colleges shut down in 2015 after it faced multiple investigations and lawsuits for defrauding students out of millions in federally backed loans. In 2016, the attorney general of California, now Vice President Kamala Harris, secured a $1.1bn judgment against Corinthian, with restitution for students who were defrauded by the company, which folded after filing for bankruptcy in 2015.
While many consider this a good move, some representatives privately expressed skepticism – mainly because these former students were victims of predatory practices by the now-defunct for-profit chain of colleges.
“Corinthian wouldn’t be viewed as a good first step. [It] would be viewed as them doing something that should have happened years ago because they were the victims of fraud,” said a fourth Democrat working on student debt issues.
Many borrowers around the country await an even broader move by the White House to forgive a portion of federal student loan debt. While reports have said the Biden administration is looking to zero in on $10,000 per person, nothing has been decided as of yet.