The U.S. Department of Education announced Wednesday it will wipe out $5.8 billion in fill loans discharged from 560,000 student loan borrowers who attended the for-profit Corinthian Colleges.
Students who attended Corinthian from its founding in 1995 through its closure in April 2015 will have their student loans discharged without any actions on their part. The Education Department said this action is the largest single loan discharge in its history.
“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 Education Department wrote in a press release.
This brings the total loan relief the Biden-Harris Administration has approved for borrowers to $25 billion since January 2021.
This debt relief comes after the Education Department found that Corinthian “engaged in widespread and pervasive misrepresentations related to a borrower's employment prospects, including guarantees they would find a job”. Department officials said Corinthian had made “pervasive misstatements” to prospective students about their ability to transfer credits.
Corinthian had officially shut down in 2015 following a lawsuit by then-Attorney General of California Kamala Harris, alleging the company intentionally misrepresented to its students about job placement rates and was engaging in deceptive and false advertising and recruitment.
Harris’ 2013 lawsuit triggered an investigation by the Education Department, state, and federal regulators. The investigation was released in 2015 confirming the allegations, and Harris obtained a more than $1 billion judgment against Corinthian.
The for-profit institute had 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, according to the Education Department.
"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."
Impacted students will receive notification, the Education Department wrote in a press release.
The student loan relief comes as Biden works toward making a decision on broad student loan forgiveness for federal 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 and 40,000 borrowers who receive Public Service Loan Forgiveness.
Department officials said it is working on new regulations that will permanently improve a variety of the existing student loan relief programs, significantly reduce monthly payments, and provide greater protections for students and taxpayers against unaffordable debts.
