The U.S. Department of Education has revealed it’s cancelling $5.8 billion of student loan debt still owed by 560,000 ex-students who attended schools run by the now defunct for-profit educational entity known as Corinthian Colleges. It’s the department’s “largest student loan forgiveness action ever,” The New York Times notes.
The fact that hundreds of thousands of people will benefit — and they’ll get their covered debt automatically cancelled without the need for any filings with the federal government on their parts — makes this development a truly remarkable move. “Providing this targeted relief 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,” the Department of Education said in a press release. “Today’s action brings the total loan relief the Biden-Harris Administration has approved for borrowers to $25 billion since January 2021.”
Among other original issues with Corinthian Colleges, they were found by federal authorities to have “engaged in widespread and pervasive misrepresentations related to a borrower’s employment prospects, including guarantees they would find a job,” that same press release explained. Corinthian also falsified public job placement rates. “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,” Secretary of Education Miguel Cardona said. “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 newly announced debt cancellation apparently covers costs incurred in association with any attendance at any Corinthian Colleges institution — ever. Vice President Kamala Harris has a history with Corinthian — she sued Corinthian back in 2013 while serving as attorney general of the state of California. (At the time, Corinthian still operated.) Harris made the case at the time that Corinthian was targeting vulnerable individuals like those with low incomes. Some former students who once attended Corinthian Colleges-run institutions have previously had Corinthian-associated debts wiped away by the federal government, but those moves were dependent on the filing of paperwork with federal officials. During her time at the helm of the Education Department during Donald Trump’s presidency, Betsy DeVos actually “froze” the program under which a stream of former Corinthian students were receiving debt relief, The New York Times explains.
Notably, “those who made payments on federally owned loans that are still outstanding will receive refunds for their past payments,” as the Times summarized revelations from Education Department officials regarding this new Corinthian-related move. There remains a broader push for additional action on student debt by the Biden administration; an across-the-board adjustment to what people owe, without apparent regard for their original schools, has yet to be announced. In the meantime, easing the financial burdens felt by hundreds of thousands of Americans could obviously provide substantial benefits to these people. Across the economy, things are looking up — the jobs market in May beat expectations from economists, and unemployment levels remain relatively low. Although inflation — affecting people worldwide — remains intense, U.S. wage growth in certain areas has at times gone faster than inflation.
