The White House has announced the cancellation of billions of dollars in federal student loan debt for students who attended the now-defunct Corinthian Colleges chain in what is the largest loan elimination in the Department of Education’s history.
The sweeping move will erase a whopping $5.8 billion for 560,000 borrowers who attended the schools from 1995, when it was founded, to 2015 when it collapsed, the DOE said Wednesday.
The for-profit Corinthian Colleges shut down after the Obama administration discovered widespread fraud, including multiple campuses falsifying data on the success of their graduates.
“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,” said Cardona.
Borrowers who have a remaining balance on their debt will also get refunds on payments already made, Education Department officials said. But the students who already paid off all their debt are out of luck.
Hundreds of students told investigators they were promised cushy jobs after graduation but instead ended up with lousy prospects, including working at grocery stores and fast food chains. Corinthian also falsely told students their course credits could be transferred to other colleges, federal officials said at the time.
“This is a tremendous student victory, and it belongs to the tens of thousands of borrowers who were cheated and abused by Corinthian Colleges,” said Eileen Connor, director of the Project on Predatory Student Lending, which has represented Corinthian students in lawsuits. “They never stopped fighting — over three administrations — for the justice they deserve under the law.”
The Biden administration’s move comes as the Democrat considers larger student loan forgiveness for millions, including wiping at least $10,000 in loans for borrowers.
Education Department officials reported in December it had more than 109,000 pending applications from students that accused their colleges of fraud, including many from Corinthian.
Tens of thousands of ex-Corinthian students were already eligible for debt cancellation, but had to undertake an application process that was confusing and not well known, advocates said.
Corinthian, at one time, boasted more than 100 campuses across the country and more than 110,000 students at three of its colleges.