Biden Administration Scraps $5.8B in Student Loans at Chain

Hundreds of thousands of students who attended the for-profit Corinthian Colleges chain will automatically have their federal student loans canceled, the Biden administration announced Wednesday, a move that aims to bring closure to one of the most notorious cases of fraud in American higher education. Under the new action, all those who attended the now-defunct chain from its founding in 1995 to its collapse in 2015 will have their federal student debt wiped clean, the AP reports. It will erase $5.8 billion in debt for more than 560,000 borrowers, the largest single loan discharge in Education Department history, according to the agency.

"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," Education Secretary Miguel Cardona said. 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 about. Now, the relief will be made automatic and extended to additional borrowers. Those who have a remaining balance on their Corinthian debt will also get refunds on payments they have already made, Education Department officials said. But the action does not apply to loans that have already been paid off in full.

At its peak, Corinthian was one of the nation’s largest for-profit college companies, with more than 100 campuses across the country and more than 110,000 students at its Everest, WyoTech and Heald schools. But the company shut down in 2015 amid widespread findings of fraud. The Obama administration found that scores of campuses were falsifying data on the success of their graduates. In some cases, the schools reported that students had found jobs in their fields of study even though they were working at grocery stores or fast food chains. Hundreds of students 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.

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