Biden just paid off $5.8 billion in student debt for 560,000 borrowers

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  • The Department of Education has forgiven $5.8 billion in debt to 560,000 Corinthian College alumni.
  • Corinthian closed in 2015 after allegations of predatory behavior that misled students.
  • This is Biden’s latest move to provide relief to borrowers who have been scammed by for-profit schools.

On Wednesday, President Joe Biden’s Department of Education announced that all remaining student loan borrowers who attended the now-defunct for-profit Corinthian colleges would have their debt balances wiped out.

The announcement approved $5.8 billion for a group student loan forgiveness claim covering 560,000 former Corinthian students.

Corinthian closed in 2015 after a series of investigations found the school was involved in predatory behavior that urged students to take out loans when it wasn’t the best option for them. Since then, for some groups of students who went to Corinthian, the ministry has approved borrower defenses against repayment claims – a form of credit relief for borrowers cheated by for-profit schools.

Wednesday’s announcement is the largest group approval the department has responded to to date, and it will include borrowers who have not themselves filed relief requests.

“Starting today, any student who is being deceived, cheated and driven into debt by Corinthian colleges can rest assured that the Biden-Harris administration has their back and will pay off their state student loans,” Secretary of Education Miguel Cardona said in a statement. “For far too long, Corinthian has engaged in the wholesale financial exploitation of students, leading them to take on more and more debt to pay promises they would never keep.”

According to the press release, the Department of Education will begin notifying affected students of this relief, and borrowers will not need to take any additional action themselves.

To date, Cardona has approved more than $2 billion in borrower defense claims for former for-profit students, including some from Corinthian, ITT Technical Institutes and Marinello Schools of Beauty. But these measures have still left many borrowers who have filed claims waiting for relief.

In March, Insider reported that 16 Democratic lawmakers, including Massachusetts Sen. Elizabeth Warren, had asked Cardona to address the remaining entitlements for Corinthian students, saying the Department of Education had processed those entitlements “in a complex and piecemeal manner.” that have “delayed” relief to thousands of borrowers while thousands of others appear to be denied any relief.”

“For the estimated 350,000 students cheated by Corinthian, which closed its campuses in 2015, the wait for debt relief has spanned three presidential administrations,” lawmakers wrote.

Since Corinthian closed after investigations into predatory behavior, such as seducing students into taking on unpayable debt, alumni have been fighting for exoneration themselves. A group of borrowers known as the Corinthians 15 met with the Debt Collective – the country’s first debtors’ union – and prepared for a debt strike that has now led to 200 students fighting for approval of their defense claims by their borrowers.

“It’s been a long time coming and we’ve always wanted to,” said Nathan Hornes, one of the original 15 forwards, during a press briefing on Wednesday. “It’s a powerful moment, and it’s a moment I don’t take for granted,” added Hornes. “But there is still so much to do. It doesn’t stop there. The buck doesn’t stop with us.”

Vice President Kamala Harris also took action against Corinthian while she was California Attorney General. 2016 she has secured a $1.1 billion judgment against Corinthian that provides compensation for alumni who were scammed by the for-profit chain.

Along with easing student loans, some of Biden’s top officials have vowed to ensure for-profit schools are held accountable for misbehavior. Late last year, Federal Student Aid chief Richard Cordray said that “more needs to be done to stop people abusing these student assistance programs, cheating taxpayers, cheating students.”

Widespread relief on Wednesday also comes as Biden works towards making a decision on sweeping student-loan forgiveness for federal borrowers. While Biden himself has not confirmed a specific amount of relief, recent reports suggest he is considering $10,000 in forgiveness for borrowers making less than $150,000 a year.

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