White House cancels $5.8 billion in student loans tied to now-defunct school | KTAB
(The Hill) — The Biden administration plans to pay off all outstanding federal student loans borrowed by former Corinthian Colleges students, offering $5.8 billion in loan forgiveness to 560,000 borrowers.
The Group Loan Release applies to all former students who attended a campus owned or operated by Corinthian Colleges Inc. from the company’s inception in 1995 until its closure in 2015.
The Hill first reported earlier Wednesday that the Biden administration plans to administer widespread relief to former Corinthian students, citing multiple sources.
Vice President Harris is expected to announce the measure on Thursday.
The Ministry of Education will notify Corinthian alumni in the coming weeks through a letter, and actual releases will follow in the following months. Borrowers will not have to do anything to receive their discharge, and the discharge will not affect borrowers who have already repaid their loan in full.
“We have determined that every borrower who attended Corinthian was subject to unlawful conduct at Corinthian and at this point we have various legal authorities available to us to repay those loans,” a senior administration official said.
Corinthian has faced multiple investigations and lawsuits for defrauding students out of millions in federally guaranteed loans. Since Corinthian’s closure, advocates like Sen. Elizabeth Warren (D-Mass.) have called on the Department of Education to provide relief to former students facing some form of debt collection.
In 2016, when Harris was attorney general in California, his office won a $1.1 billion judgment against Corinthian Colleges for “their predatory and unlawful practices.”
Starting in 2013, she filed lawsuits seeking to end the practices, which left thousands of students in debt with worthless degrees, alleging that Corinthian intentionally misrepresented information to students about placement rates and engaged in misleading and false advertising and recruiting.
The senior administration official referenced the lawsuit brought by Harris’s office during his tenure as attorney general as the reason the college had to file for bankruptcy.
This announcement is the second group release from the Biden administration’s education department. In April, he approved $238 million in loan discharges for former students of Marinello beauty schools.
So far, the total amount of loan relief provided by the Biden-Harris administration has increased to $25 billion since January 2021.
“It is difficult to overstate the significance of this announcement for borrowers who have been defrauded by Corinthian schools,” a senior administration official said. “These people have been in limbo for years, and now they and their families will finally get the relief they deserve.”
“Going forward, we will continue to ensure that all Americans with federal student loans get the protection and support they deserve to help them achieve the American Dream,” the official added.
The White House indicated it was nearing a decision on broad student loan debt forgiveness, focusing on forgiveness of $10,000 per borrower, but did not say a decision was finalized. .
Multiple sources told The Hill in late April that Biden was seeking to cancel at least $10,000 per borrower, the amount the president backed cancellation during his 2020 campaign, though Progressives have asked for $50,000 per borrower. .
National Economic Council Director Brian Deese told reporters Tuesday that Biden “hasn’t made a decision on this policy” when asked about the president’s potential plan to forgive $10,000 in student debt.
In April, Biden extended the pandemic moratorium on federal student loans and interest accrual through August. The pause on student loan repayments was first signed into law in March 2020 under President Trump and has been extended several times since.