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Biden administration cancels $5.8 billion in student debt

CBS News logo CBS News 6/1/2022 CBSNews
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Hundreds of thousands of students who attended the for-profit Corinthian Colleges chain will automatically get their federal student loans canceled, the Biden administration announced Wednesday, a move that aims to bring closure to one of the most notorious cases of fraud in American higher education.

Under the new action, anyone who attended the now-defunct chain from its founding in 1995 to its collapse in 2015 will get their federal student debt wiped clean. It will erase $5.8 billion in debt for more than 560,000 borrowers, the largest single loan discharge in Education Department history, according to the agency.

"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. "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."

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Tens of thousands of former Corinthian students were already eligible for debt cancellation, but they had to file paperwork and navigate an application process that advocates say is confusing and not widely known about. Now, the relief will be made automatic and extended to additional borrowers.

Those who have a remaining balance on their Corinthian debt will also get refunds on payments they have already made, Education Department officials said. But the action does not apply to loans that have already been paid off in full.

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