The U.S. Department of Education is wiping the slate clean for 560,000 students who borrowed money to attend Corinthian College. The agency announced that it is discharging all those students' remaining federal student loans, an amount that equates to $5.8 billion.
The Department said the discharge will include everyone, even borrowers who have not yet applied for a borrower defense discharge. The discharge will be done automatically without any additional action from borrowers.
Addressing a longstanding problem
It took nearly three administrations to make this happen, but the Corinthian students have the Biden-Harris White House to thank for their loan discharges. Officials have cited an ongoing commitment to helping student loan borrowers get the relief they are entitled to. With the Corinthian action on the books, the administration has approved $25 billion in loan relief.
Bringing Corinthian to justice has been a personal crusade for Vice-President Harris. She sued the institution when she was the attorney general of California in 2013, claiming that the for-profit college purposely misrepresented its job placement rates and was engaging in deceptive and false advertising and recruitment.
"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."
The Department says it’s not finished
The Department of Education made it clear that its efforts to clean up the whole student loan mess doesn’t stop here. Last week, it announced a revamp of its student loan program in hopes of getting students and loan borrowers a full slate of benefits, including loan discharges.
If it sticks, the promises the Department makes could forever change the student loan business -- from making student loans more affordable to preventing a future debt crisis by holding colleges liable for leaving students with mountains of debt and without good jobs.
The Department also recently announced fixes to longstanding problems with income-driven repayment that will help thousands of borrowers receive forgiveness through that program, as well as 40,000 borrowers who receive Public Service Loan Forgiveness (PSLF).