Ex-Corinthian students get billions in debt erased
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 — once based in Santa Ana 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.”
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.
Consumer confidence hits 8-month low
California consumer confidence fell to an eightmonth low in May as recession talk became part of the mainstream economic conversation, according to the Conference Board, which polls shoppers monthly.
The overall statewide index was 109.8 in May — down from a revised 118.6 a month earlier and down from 118.2 a year ago. May saw a 7% one-month drop and a 7% drop over 12 months. Note that California's confidence averaged 113 in the five years before the pandemic.
So, 2022 has started with four confidence dips in five months, pushing this optimism yardstick to its lowest since September 2021.
Rising mortgage rates have put a chill on the state's red-hot housing market this year. And other rising prices pushed inflation to a four-decades high, another added concern.
JPMorgan CEO warns of storm clouds ahead
Jamie Dimon warned investors to prepare for an economic “hurricane” as the economy struggles against an unprecedented combination of challenges, including tightening monetary policy and Russia's invasion of Ukraine.
“That hurricane is right out there down the road coming our way,” the JPMorgan Chase & Co. chief executive officer said at a conference sponsored by AllianceBernstein Holdings Wednesday. “We don't know if it's a minor one or Superstorm Sandy. You better brace yourself.”
Dimon said at JPMorgan's investor day in May that there were “storm clouds” looming over the U.S. economy, but he said he's since updated that forecast given the challenges faced by the Federal Reserve as it attempts to rein in inflation.
“Right now it's kind of sunny, things are doing fine, everyone thinks the Fed can handle it,” Dimon said.
Shares of the company dropped 1.8% to $129.81 at 11:21 a.m. in New York after Dimon's remarks on the economy, extending this year's decline to 18%.
JPMorgan economists last month lowered their growth outlook for the second half of 2022 to a 2.4% rate from 3%, for the first half of 2023 to 1.5% from 2.1% and for the second half of 2023 to 1% from 1.4%. They cited falling stock prices, higher mortgage rates and a stronger dollar relative to trading partners.
Dimon said Wednesday that JPMorgan is preparing for that turbulence by being conservative with its balance sheet.