In its largest student loan forgiveness action ever, the Education Department said on Wednesday that it would wipe out $5.8 billion owed by 560,000 borrowers who attended Corinthian Colleges, one of the nation’s biggest for-profit college chains before it collapsed in 2015.
The debt cancellation will be automatic, meaning former Corinthian students will not have to apply to have their debts canceled. The Education Department will eliminate any remaining balance on the federal student loans of those who attended any Corinthian campus or online program during the chain’s 20-year existence.
“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,” Education Secretary Miguel Cardona said.
President Biden faces intense pressure from student borrowers and progressive lawmakers to take executive action to broadly cancel federal student loan debts. Mr. Biden, who promised during his campaign to knock $10,000 off the loans of “everybody in this generation,” said in April that he was “considering dealing with some debt reduction,” but White House officials said no final decision had yet been made.
As an interim step, his administration has significantly expanded the government’s use of relief programs aimed at a variety of borrowers, including public service workers, those who are permanently disabled and people who were defrauded by colleges.
Borrowers and their advocates celebrated the Corinthian decision as a watershed moment.
“It’s really hard to overstate how transformative this is going to be for hundreds of thousands of people,” said Thomas Gokey, a founder of the Debt Collective, an activist group.
This is a developing story. Check back for updates.