Biden Administration Cancels $5.8 Billion in Loan Debt for Students Who Attended Corinthian Colleges

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The Biden administration announced on June 1 that it will cancel $5.8 billion in student debt for 560,000 borrowers who attended Corinthian Colleges. This is the largest single loan discharge in the history of the Department of Education.

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The Department of Education said in statement that the discharge builds upon conclusions the department first reached in 2015 that Corinthian engaged in “widespread and pervasive misrepresentations related to a borrower’s employment prospects, including guarantees they would find a job.”

The department added that Corinthian also falsified public job placement rates and made pervasive misstatements to prospective students about the ability to transfer credits.

“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,” U.S. Secretary of Education Miguel Cardona, said in the release. “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. 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.”

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This brings the total loan relief the Biden administration has approved for borrowers to $25 billion since January 2021, according to the release.

“For 3 administrations, more than half a million Americans have waited for help after being defrauded by Corinthian College, leaving students with worthless degrees and crushing debt. I’ve worked for years for @usedgov to cancel these loans. @POTUS and @VP are delivering relief,” Senator Elizabeth Warren tweeted on June 1.

In 2013, Vice President Harris sued Corinthian when she was attorney general of California, alleging that the company intentionally misrepresented job placement rates and engaged in deceptive and false advertising and recruitment, according to the release. In turn, this triggered several other inquiries by the Education Department and other regulators as well as actions by the Education Department that ultimately resulted in Corinthian selling most of its campuses in 2014 and closing the remaining ones in 2015.

The New York Times reported that Corinthian shut down its campuses and filed for bankruptcy, leaving tens of thousands of students in limbo, and pushing a group of students — the Corinthian 15 — to start a debt strike.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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