Biden kills student debt in Corinthian fraud case

Move erases $5.8 billion for over 560,000 former students of for-profit chain

WASHINGTON — Hundreds of thousands of students who attended the for-profit Corinthian Colleges chain will automatically get their federal student loans canceled, the Biden administration says, aiming to bring closure to one of the most notorious cases of fraud in American higher education.

Anyone who attended the now-defunct chain from its founding in 1995 to its collapse in 2015 will get his or her federal student debt wiped clean. The move will erase $5.8 billion in debt for more than 560,000 borrowers, in what the Education Department said was the largest single loan discharge ever.

“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 Wednesday. “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.”

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. Now, the relief will be made automatic and extended to additional borrowers.

Those with a remaining balance on their Corinthian debt will also get refunds on payments already made, department officials said. But the action does not apply to loans paid in full.

At its peak, Corinthian was one of the largest for-profit college companies. It had more than 100 campuses and more than 110,000 students at its Everest, Wyotech and Heald schools.

The company shut down seven years ago amid widespread findings of fraud.

The Obama administration found that scores of campuses were falsifying data on the success of their graduates. In some cases, the schools reported that students had found jobs in their fields of study even though they were working at grocery stores or fast-food chains.

Students commonly told investigators they were pressured to enroll with promises of lucrative employment, only to end up with huge sums of debt and few job prospects. Federal officials found that the company falsely told students their course credits could be transferred to other colleges.

The case inspired a federal crackdown on for-profit colleges, and the Obama administration promised to forgive loans for Corinthian students whose programs lied about job placement rates. That administration went on to expand a process known as borrower defense to repayment, which allows any defrauded student to apply for debt cancellation.

The Biden administration later announced full cancellation for all Corinthian students who had been given only partial forgiveness.