The Biden administration has moved to erase $5.8 billion in student debt for former students of the collapsed for-profit Corinthian Colleges chain.
This is the largest single federal loan discharge in the history of the Education Department. It will result in 560,000 borrowers receiving full loan discharges.
“Providing this targeted relief is part of the Biden-Harris Administration’s continued commitment to helping borrowers who are struggling the most by ensuring discharge programs provide borrowers the complete relief to which they are entitled,” the Department of Education said in a statement. “Today’s action brings the total loan relief the Biden-Harris Administration has approved for borrowers to $25 billion since January 2021.”
In 2015, the Education Department concluded that Corinthian engaged in widespread and pervasive misrepresentations related to a borrower’s employment prospects, including guarantees they would find a job. Corinthian also made pervasive misstatements to prospective students about the ability to transfer credits and falsified their public job placement rates. Founded in 1995, Corinthian acquired several troubled private for-profit colleges across the country. At its peak in 2010, it enrolled more than 110,000 students at 105 campuses.
Then-California Attorney General Kamala Harris‘ investigation into Corinthian played a key role in developing findings against the for-profit college chain and the Department’s overall work to discharge the loans of borrowers who were harmed by its wrongdoing, a process that has helped cancel the loans of around 100,000 borrowers to date.
“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,” said U.S. Secretary of Education Miguel Cardona.
“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. While our actions today will relieve Corinthian Colleges’ victims of their burdens, the Department of Education is actively ramping up oversight to better protect today’s students from tactics and make sure that for-profit institutions – and the corporations that own them – never again get away with such abuse.”
In 2013, Vice President Kamala Harris sued Corinthian when she was attorney general of California, alleging that the company intentionally misrepresented to its students about job placement rates and was engaging in deceptive and false advertising and recruitment. Harris’ investigation and lawsuit triggered several other inquiries by the Department and other federal and state regulators, as well as actions by the Department that ultimately resulted in Corinthian selling most of its campuses in 2014 and closing the remaining ones in 2015.
Including this group discharge, the Education Department has now approved $25 billion in loan forgiveness for 1.3 million borrowers. This includes:
- $7.9 billion for 690,000 borrowers whose institutions took advantage of them through discharges related to borrower defense and school closures.
- $7.3 billion for more than 127,000 borrowers through Public Service Loan Forgiveness (PSLF).
- More than $8.5 billion in total and permanent disability discharges for more than 400,000 borrowers.
The Department also recently announced fixes to long-standing problems in income-driven repayment that will help thousands of borrowers receive forgiveness through that program, as well as 40,000 borrowers who receive PSLF.