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The Biden administration says it will cancel federal student loans for some 560,000 borrowers who attended the for-profit Corinthian Colleges chain.
Under the new action, millions of thousands of students who attended the now-defunct chain will receive $5.8 billion in full loan discharges – the largest of its kind in the Department of Education’s history.
“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,” Education Secretary Miguel Cardona said in a statement. “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.”
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.
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Those who have a remaining balance on their debt will also get refunds on payments they have already made, Education Department officials said. Students who have paid off their school loans will not be eligible.
At its peak, Corinthian was one of the nation’s largest for-profit college companies, with more than 110,000 at 100 campuses across the country.
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. Federal officials also found that the company falsely told students their course credits could be transferred to other colleges.
The case inspired a federal crackdown and the Obama administration promised to forgive loans for Corinthian students whose programs lied about job placement rates. But an explosion in applications for debt forgiveness, along with political battles over the process, created a years-long backlog in the process, leaving many former Corinthian students still awaiting relief.
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The Biden administration’s announcement comes as President Biden considers broader student loan forgiveness. On the campaign trail, Biden said he supported forgiving $10,000 in student loans for all borrowers. He later indicated that such action should come through Congress, but the White House has said he is considering whether to pursue it through executive action.
The Associated Press contributed to this report.