Student rates

Student loan debt cleared for former Corinthian students

Hundreds of thousands of students who attended for-profit chain Corinthian Colleges will automatically have their federal student loans cancelled, the Biden administration says, in a bid to put an end to one of the most notorious cases of fraud. in American higher education.

Anyone who frequented the now-defunct chain from its founding in 1995 until its collapse in 2015 will have their federal student debt erased. The move will erase $5.8 billion in debt for more than 560,000 borrowers, in what the Department of Education called the biggest loan release ever.

“Starting today, every student deceived, defrauded and indebted by Corinthian colleges can be assured that the Biden-Harris administration has their back and will cancel their federal student loans,” the Education Secretary said Wednesday. Miguel Cardona. “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.”

Tens of 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. From now on, the relief will be made automatic and extended to other borrowers.

Those with a remaining balance on their Corinthian debt will also get refunds on payments already made, department officials said. But the action does not apply to loans repaid in full.

At its height, Corinthian was one of the largest for-profit university enterprises. It had over 100 campuses and over 110,000 students at its Everest, WyoTech and Heald schools.

The company closed in 2015 following widespread discoveries of fraud.

The Obama administration — working with current Vice President Kamala Harris, who was California’s attorney general at the time — discovered that dozens of campuses were falsifying their graduate success 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.

Students often told investigators they had been pressured into enrolling with promises of lucrative employment, only to end up with huge debts and few job prospects. Federal officials discovered that the company had falsely told students that their course credits could be transferred to other colleges.

The case inspired a federal crackdown on for-profit colleges, and the Obama administration promised to cancel loans to Corinthian students whose programs lied about placement rates. This administration then expanded a process known as repayment borrower defense, which allows any defrauded student to seek cancellation of their debt.

But an explosion of demands for debt forgiveness, along with political battles over the process, have created a year-long backlog in the process, leaving many former Corinthian students still waiting for help.

The Trump administration generated backlash when it began giving only partial loan forgiveness to defrauded students, giving lower levels of relief to those with higher incomes. Former Corinthian students continued the change. A federal judge ended the policy and ordered the Department of Education to stop collecting payments on the Corinthian debt.

The Biden administration later announced the full cancellation of all Corinthian students who had only received partial pardons, but thousands more waited for the department to process their relief requests.

In December, the department reported that it had more than 109,000 pending applications from students alleging fraud by their colleges, mostly in the for-profit sector. Borrowers and their lawyers urged the government to write off all Corinthian debt, saying evidence of misconduct was so widespread that all students in the chain were defrauded.

The administration’s announcement on Corinthian debt cancellation comes as President Joe Biden faces mounting pressure to enact broader student loan forgiveness for millions. As a candidate, Biden said he supports 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.

Lawyers said the government’s decision on Corinthian brings long-delayed justice.

“This is a tremendous student victory, and it belongs to the tens of thousands of borrowers who have been deceived and abused by Corinthian Colleges,” said Eileen Connor, director of the Project on Predatory Student Lending, which represented Corinthian students in lawsuits. “They have never stopped fighting – through three administrations – for the justice they deserve under the law.”

Libby DeBlasio Webster, senior counsel for the advocacy group Student Defence, called it a “new start” for former Corinthian students, but she noted that many defrauded students from other for-profit colleges are waiting for help.

She said she hopes the news “is a sign that more decisions are on the horizon for thousands of students in the same situation who are waiting for this kind of relief,” she said.

Former Corinthian student Nathan Hornes said the channel was “an absolute joke of a school”, recalling how he was asked to play a board game as a final exam for a class on the Los campus. Angeles from the Everest Institute. Hornes had his debt canceled in 2017 through the Borrower’s Defense process, but his sister Natasha is among 560,000 former Corinthian students who are now getting a cancellation.

“My sister and all others who have had the same experience of being scammed by Corinthian finally have the same relief to have the financial burden lifted,” he said in a statement. “They deserve it too, and I’m so happy that today they can finally feel that freedom.”

A for-profit college trade group says students cheated by their colleges deserve relief, but Corinthian’s actions “do not represent all private vocational schools”.

“The Ministry (of Education) and others should not confuse the actions of one organization with an entire sector that has provided opportunities for millions of students and contributed to our country’s workforce said Jason Altmire, president and CEO of Career Education Colleges and Universities.

Collin Binkley is an AP Education writer.

The Associated Press education team receives support from the Carnegie Corporation of New York. The AP is solely responsible for all content.