White House cancels $5.8B in student loans for former Corinthian College students
By The Citizen on June 1, 2022
The Biden administration is planning to discharge all outstanding federal student loans borrowed by former Corinthian Colleges students, providing $5.8 billion in loan cancellations to 560,000 borrowers.
The group loan discharge applies to all former students who attended any campus owned or operated by Corinthian Colleges Inc. since the company was founded in 1995 through its closure in 2015.
Vice President Harris is expected to announce the measure on Thursday.
The Department of Education will notify former students of Corinthian in the coming weeks through a letter, and the actual discharges will follow in the months after. Borrowers will not have to take any actions to receive their discharges, and the discharge will not impact borrowers who have already fully repaid their loans.
“We’ve reached a determination that every borrower who attended Corinthian was subject to illegal conduct at Corinthian and at that point we have a variety of legal authorities available to us to discharge those loans,” a senior administration official said.
Corinthian faced multiple investigations and lawsuits for defrauding students out of millions in federally backed loans. Since Corinthian closed, advocates like Sen. Elizabeth Warren (D-Mass.) have called on the Education Department to provide relief to former students who faced some form of debt collection.
In 2016, when Harris was attorney general in California, her office obtained a $1.1 billion judgment against Corinthian Colleges for “their predatory and unlawful practices.”
Beginning in 2013, she filed suits seeking to stop the practices, which left thousands of students in debt with worthless degrees, alleging that Corinthian intentionally misrepresented information to students about job placement rates and was engaging in deceptive and false advertising and recruitment.
The senior administration official referenced the lawsuit by Harris’s office during her time as attorney general as the reason the college had to declare bankruptcy.
This announcement is the second group discharge from Biden administration’s Education Department. In April, it approved $238 million in loan discharges for former Marinello Schools of Beauty students.
So far, the total amount of loan relief granted by the Biden-Harris administration has grown to $25 billion since January 2021.
“It is hard to overstate how important this announcement is for the borrowers who were defrauded by Corinthian schools,” a senior administration official said. “These people have been in limbo for years, and now they and their families will finally get the relief they deserve.”
“Moving forward, we will continue to ensure that all Americans with federal student loans get the protection and support they deserve to help them achieve the American dream,” the official added.
The White House has indicated that it is nearing a decision on broad student loan debt forgiveness, zeroing in on canceling $10,000 per borrower, but has not said that a decision is finalized.
Several sources told The Hill in late April that Biden was looking to cancel at least $10,000 per borrower, the amount the president had supported canceling in his 2020 campaign, although progressives have called for $50,000 per borrower.
National Economic Council Director Brian Deese on Tuesday told reporters Biden “hasn’t made any decision on that policy” when asked about the president’s potential plan to forgive $10,000 in student debt.
Biden in April extended the pandemic moratorium on federal student loans and interest accrual through August. The pause on student loan payments was first enacted in March 2020 under President Trump and has been extended multiple times since.