The Biden administration will forgive billions in debt held by more than a half-million former students of the defunct for-profit Corinthian Colleges chain, The Washington Post reports.
The Education Department announced on Wednesday it will forgive $5.8 billion in debt held by 560,000 former students of the chain, which included Everest Institute, WyoTech, and Heald College.
Former students will automatically have their debt forgiven.
“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,” Education Secretary Miguel Cardona said in a statement. “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.”
Chain imploded:
Corinthians had more than 110,000 students at 105 campuses at its peak in 2010 but the company came under fire for high loan default rates and dubious programs and lost access to federal funds in 2014 after allegations of deceptive marketing and lying to the government, forcing the company to shutter or sell its schools.
Former students spent years lobbying the federal government to forgive the debt under the “borrower defense to repayment” statute, which allows the Education Department to forgive federal student loans when colleges violate students’ rights.
While the Obama administration approved thousands of requests, the Trump administration largely ignored the scandal.
Calls for more:
The Biden administration is reportedly gearing up to cancel up to $10,000 in student debt for borrowers who earn under $150,000.
But progressives are calling on Biden to go further.
“There is growing energy and strong bipartisan public support for immediate broad-based debt cancellation,” a coalition of 500 groups wrote to the White House. “Such executive action is one of the few available tools that could immediately provide a boost to upwards of 44 million borrowers and the economy.”
The coalition called on Biden to cancel up to $50,000 in student loan debt to “help narrow the racial and gender wealth gaps.”
“The average Black borrower has $53,000 in student loan debt four years after graduation, nearly twice the amount as their white counterparts. President Biden, $10,000 will not help those in the lower class who have been devastated by our oppressive system,” said NAACP President Derrick Johnson in a statement. “The Black community will be watching closely when you make your announcement, but $10,000 is not enough. $10,000 in cancellation would be a slap in the face. President Biden, it’s not about whether you can do it, it’s about whether or not you have the will to do it.”
