All former Corinthian students will get their loans canceled
The Department of Education will automatically discharge $5.8 billion in federal student loans owed by more than 560,000 borrowers who attended a campus operated by Corinthian Colleges, a for-profit education company that was found guilty of defrauding students.
Vice President Kamala Harris will announce the group’s discharge at noon today.
This is the second mass discharge of federal student debt accrued by students who attended for-profit predatory colleges in history, following the mass discharge of 28,000 students who attended Marinello Beauty Schools. by the department in April. The Corinthian discharge is 20 times larger than that of the Marinello schools, making it the largest group discharge of student debt in history.
Once one of the largest for-profit education companies, Corinthians enrolled nearly 110,000 students at 105 campuses in 2010.
“Starting today, every student deceived, defrauded and indebted by Corinthian colleges can be assured that the Biden-Harris administration has their back and will cancel their federal student loans,” said Education Secretary Miguel Cardona. “For too long, Corinthian has engaged in the large-scale financial exploitation of students, driving them into deeper and deeper debt to pay for promises they would never keep.”
In 2013, Harris, then California’s attorney general, sued Corinthian for predatory practices. The Ministry of Education joined the investigation two years later. Their joint findings revealed that Corinthian misrepresented placement rates in hundreds of programs, misleading students about their job prospects after graduation.
In 2015, the Department of Education fined Corinthian Colleges $30 million for misrepresenting placement rates, which plunged the for-profit education company into bankruptcy a few weeks later, and it closed its 28 campuses, which were enrolling nearly 16,000 students at the time.
After Corinthian closed, the federal government allowed students who had not completed their programs to apply for debt relief under the Borrower’s Defense of Repayment Act. However, due to a lack of communication from the Ministry of Education and the complicated nature of borrower defense requests, many students were unsure how to obtain such relief.
Corinthian is just one of many for-profit colleges that have been caught using fraudulent advertisements, which make their programs look more promising than they really are, to attract vulnerable populations, such as than low-income and minority students, veterans or single mothers. , to their programs.
A group of 15 heavily indebted former students attending Corinthian Colleges went on strike refusing to repay their student loans to raise awareness of the predatory practices that drove these students into debt. This strike extended to more than 1,000 students demanding that their debts be relieved by the federal government.
Members of the group, who call themselves Corinthians 15, spoke about the announcement on Wednesday alongside the Debt Collective, an organization that advocates for debtors and has helped Corinthian students apply for debt relief.
“I am happy that our loans have been repaid, but the battle is not over. We still have a lot to do and, in the end, it took too long. I struggled for years because of it,” said Latonya Suggs, one of the original 15 Corinthians.
Although 100,000 former students of Corinthian institutions were able to obtain cancellation of their loans thanks to defense claims by the borrower, this action by the Biden administration will allow students to obtain automatic cancellation of their debts, without the borrower needing to take individual action.
Former Corinthian students with outstanding debts can expect to receive notification from the Department of Education that their remaining loans will be forgiven. According to a senior Biden administration official, borrowers will be refunded on previous payments if they still have an outstanding balance. However, borrowers who have fully repaid their loan will not be reimbursed.