Biden administration to cancel $5.8 billion in single largest student loan forgiveness effort ever
The U.S. Department of Education announced Wednesday that it will forgive all remaining debt for over half a million borrowers who attended and were defrauded by any campus owned or operated by Corinthian Colleges, the for-profit education chain that closed in 2015.
This is the department’s largest single student loan discharge ever: An estimated 560,000 borrowers will automatically have their loans totaling an estimated $5.8 billion canceled. They don’t have to apply for a borrower defense discharge; the department says it will discharge the loans without “any additional action on their part.”
All students who attended an institution owned by Corinthian Colleges from the time it was founded in 1995 to the time it closed in 2015 qualify for the forgiveness.
“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,” U.S. Secretary of Education Miguel Cardona said in a press release.
According to the Department of Education, Corinthian Colleges misrepresented the employment prospects of graduates, its job placement rates, and the transferability of it credits. In 2016, then-California Attorney General and current Vice President Kamala Harris won a $1.1 billion judgment against Corinthian for consumer fraud. She has pushed for loan forgiveness for the defrauded students for years.
The Education Department says it will notify students who attended Corinthian of the decision by email soon, and that the actual discharge of the loans will follow in the coming months.
The action comes as President Joe Biden is reportedly debating whether to forgive up to $10,000 in student loan debt for undergraduate borrowers with federal loans. Biden said in April that he would have a decision on wider-scale student loan cancellation “in the next few weeks.” He has not given any more public information about any decision since then.
Wednesday’s decision is also a significant break from the previous presidential administration. Under former President Donald Trump, then-Education Secretary Betsy DeVos was held in contempt of court by a federal judge for violating an order to stop collecting student loan payments from the defrauded Corinthian students.
To date, Biden has forgiven more student loan debt than any other president, totaling $25 billion since January 2021, according to the Education Department. All of the forgiveness has been targeted to students who were defrauded or who qualify for debt forgiveness under a program like Public Service Loan Forgiveness.
Other student loan actions taken by the Biden administration include:
Borrowers who believe they have been misled by their academic institution can submit borrower defense claims through the Education Department, which could lead to debt cancellation.
This story was originally featured on Fortune.com
