Biden Administration to Wipe Out $5.8 Billion in Student Loans for Former Corinthian College Students

President Joe Biden delivers the commencement address during the graduation and commissioning ceremony at the U.S. Naval Academy Memorial Stadium in Annapolis, Md., on May 27, 2022. (Chip Somodevilla/Getty Images)

The Biden administration is set to discharge all remaining federal student loans borrowed to attend Corinthian Colleges, which will amount to $5.8 billion in full loan discharges to 560,000 recipients, the U.S. Department of Education announced on June 1.

It comes after Corinthian, which was one of the largest for-profit post-secondary education companies in the United States, faced a string of allegations that it had intentionally deceived, defrauded, and financially exploited students.

According to the department, the group loan discharge will apply to all former students who attended any campus owned or operated by Corinthian Colleges Inc. since it was founded in 1995, up through its closure in 2015.

This includes borrowers who haven’t yet applied for a borrower defense loan repayment discharge, a federal regulation that allows student loan borrowers to seek debt relief if they attended a school that misled them, engaged in other misconduct, or violated state law related to the loan, officials said.

Those former students will have their Corinthian loans discharged without the need for any additional action on their part.

The loan discharge is the largest single such action the department has made in history and is part of the Biden-Harris administration’s “continued commitment to helping borrowers who are struggling the most by ensuring discharge programs provide borrowers the complete relief to which they are entitled,” according to the department.

Students who attended such colleges will be notified of the decision soon, the department stated. The actual discharges will follow in the months after.

In 2013, when Vice President Kamala Harris was attorney general of California, she sued Corinthian, alleging that the company had “intentionally targeted low-income, vulnerable Californians through deceptive and false advertisements and aggressive marketing campaigns that misrepresented job placement rates and school programs.”

Her lawsuit further alleged that Corinthian executives “knowingly misrepresented job placement rates to investors and accrediting agencies, which harmed students, investors, and taxpayers.”

That investigation and lawsuit led to several other inquiries by the Department of Education and other federal and state regulators. Corinthian ultimately sold the majority of its campuses in 2014 before closing the remaining campuses in 2015.

“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.

“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 latest action brings the total loan relief the Biden administration has approved for borrowers to $25 billion since January 2021.

In April, the Biden administration said it would discharge a total of $238 million in student loan debt for those who attended the Marinello Schools of Beauty because of its “pervasive and widespread misconduct.”

In that same month, Biden said he was seriously considering widespread student debt forgiveness, but a decision hadn’t yet been finalized.

He also said he wasn’t considering erasing up to $50,000 in federal student loan debt for all borrowers, a proposal that had been pushed by Senate Majority Leader Chuck Schumer (D-N.Y.) and advocated for by some other Democrats, including Sen. Elizabeth Warren (D-Mass.) and Reps. Ayanna Pressley (D-Mass.) and Ilhan Omar (D-Minn.).

Biden promised during his 2020 presidential campaign that he would cancel $10,000 in debt for each borrower, however, some experts believe that such a program could worsen the already sky-high inflation in America.