The Department of Education will make their largest discharge ever with $5.8 billion of student loan debt wiped out for students who attended Corinthian Colleges.
WASHINGTON -- Hundreds of thousands of students who attended the for-profit Corinthian Colleges chain will automatically get their federal student loans canceled, the Biden administration says, aiming to bring closure to one of the most notorious cases of fraud in American higher education.
Tens of thousands of former Corinthian students were already eligible for debt cancellation, but they had to file paperwork and navigate an application process that advocates say is confusing and not widely known. Now, the relief will be made automatic and extended to additional borrowers. Students commonly told investigators they were pressured to enroll with promises of lucrative employment, only to end up with huge sums of debt and few job prospects. Federal officials found that the company falsely told students their course credits could be transferred to other colleges.
The Trump administration generated blowback when it started granting only partial loan cancellation to defrauded students, giving lower levels of relief to those with higher incomes. Former Corinthian students sued over the change. A federal judge halted the policy and ordered the Education Department to stop collecting payments on Corinthian debt.
The administration's announcement on the Corinthian debt cancellation comes as President Joe Biden faces mounting pressure to enact broader student loan forgiveness for millions of people. As a candidate, Biden said he supports forgiving $10,000 in student loans for all borrowers. He later indicated that such action should come through Congress, but the White House has said he is considering whether to pursue it through executive action.
Former Corinthian student Nathan Hornes said the chain was"absolute joke of a school," recalling how he was once instructed to play a board game as the final exam for a class at Everest Institute's Los Angeles campus. Hornes had his debt forgiven in 2017 through the borrower defense process, but his sister Natasha is among the 560,000 former Corinthian students now getting cancellation.
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