President Biden to cancel $5.8 billion in debt for Corinthian Colleges students
The Biden administration will wipe out $5.8 billion in student loan debt for people who attended Corinthian Colleges, the United States Department of Education announced Wednesday evening.
Corinthian, a for-profit university company, went out of business in 2015 following a lawsuit filed by Vice President Kamala Harris when she was California’s attorney general.
The U.S. Department of Education will spend $5.8 billion to cancel remaining loans for 560,000 borrowers who attended one of the company’s schools or subsidiaries, including Heald College, Everest College and WyoTech.
It is the largest single loan discharge in the U.S. Education Department’s history, according to its announcement. Harris is expected to announce the debt cancellation Thursday at the U.S. Department of Education.
“For these borrowers, whose only mistake was trusting Corinthian Colleges with their higher education dreams, debt relief has been hard fought and long overdue,” California Attorney General Rob Bonta said in a statement on Wednesday.
He lauded the moving, saying it “is the final chapter in a legal battle that has spanned nearly a decade and three attorneys general.”
Nearly 93,000 Californians will receive an estimated $960 million in federal student loan debt relief as a result, according to a release from the attorney general’s office.
The office had been suing the U.S. Department of Education since 2017 for debt relief to students who attended Corinthian Colleges. The office expects the litigation to end once borrowers get relief, a spokesperson who spoke on the condition of anonymity said.
Harris, who served as California’s attorney general from 2011 to 2017, sued Corinthian and its subsidiaries in 2013 over advertising and recruitment practices, alleging that the company misrepresented job placement rates and students’ ability to transfer credits. She claimed the company intentionally targeted low-income individuals through deceptive advertisements.
A San Francisco Superior Court judge sided with Harris in 2016, ruling that the company misled students. Judge Curtis Karnow ordered that Corinthian pay $820 million in restitution to students and more than $350 million in penalties, amounting to almost $1.2 billion in relief.
Corinthian, founded in 1995 and headquartered in Santa Ana, Calif., acquired several for-profit colleges across the country and enrolled more than 110,000 students across 105 campuses at its peak in 2010.
It sold most of the campuses in 2014 and shut down for good in April 2015. It filed for bankruptcy in May 2015.
After Harris’ investigation, several other state and federal regulators, including the U.S. Education Department, started their own inquiries into Corinthian’s advertising and recruitment methods.
The Education Department will begin notifying eligible borrowers soon, the agency’s release read, with discharges coming in subsequent months.
The administration has approved $25 billion in loan relief since taking office. It comes while activists and lawmakers call for President Joe Biden to erase student loan debt more broadly.
California attorneys general have long pressed the Biden administration to offer relief to students affected by predatory lending practices.
Bonta called on the U.S. Department of Education to “swiftly” relieve Ashford University students from their federal student loan debt in March 2022 after a judge at the San Diego Superior Court found that the school gave students false information about career outcomes, costs, financial aid, transfer credits and pace of programs.
In January, California’s and dozens of other attorneys general announced a settlement with student-loan giant Navient over allegations of misconduct in its lending practices. As a result, Navient will cancel $1.7 billion in private loan debt for certain borrowers and offer $95 million in restitution for borrowers across the country.
This story was originally published June 2, 2022 at 3:00 AM with the headline "President Biden to cancel $5.8 billion in debt for Corinthian Colleges students."
