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The Biden administration announces it will cancel federal student loans for some 560,000 borrowers who attended the for-profit chain Corinthian Colleges.
Under the new action, hundreds of thousands of students who frequented the now-defunct channel will receive $5.8 billion in full loan discharges — the largest of its kind in the Department of Education’s history. ‘Education.
“Starting today, every student deceived, defrauded and indebted by Corinthian colleges can be assured that the Biden-Harris administration has their back and will repay their federal student loans,” said Education Secretary Miguel Cardona, in a statement. “For too long, Corinthian has engaged in the large-scale financial exploitation of students, driving them into deeper and deeper debt to pay for promises they would never keep.”
Thousands of former Corinthian students were already eligible for debt forgiveness, but had to file paperwork and navigate an application process that advocates say is confusing and little known.
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Those with a remaining balance on their debt will also get refunds on payments they have already made, Education Ministry officials said. Students who have repaid their school loans will not be eligible.
At its height, Corinthian was one of the nation’s largest for-profit university corporations, with more than 110,000 students at 100 campuses across the country.
The company closed in 2015 following widespread discoveries of fraud. The Obama administration found that dozens of campuses falsified their graduate achievement data. In some cases, schools reported that students found jobs in their field of study even though they worked in grocery stores or fast food chains.
Hundreds of students told investigators they had been pressured to enroll with promises of lucrative jobs, only to find themselves with huge debts and few job prospects. Federal officials also discovered that the company had falsely told students that their course credits could be transferred to other colleges.
The case inspired a federal crackdown, and the Obama administration promised to cancel loans to Corinthian students whose programs lied about placement rates. But an explosion of demands for debt forgiveness, along with political battles over the process, have 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. During the campaign trail, Biden said he supported canceling $10,000 in student loans for all borrowers. He later indicated that such action would have to go through Congress, but the White House said it was considering pursuing it with executive branch action.
The Associated Press contributed to this report.
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