US will forgive $5.8 billion in loans to Corinthian college students – NPR | Vette Leader

Students wait in front of Everest College in Industry, California, April 2015, hoping to receive their transcripts and information about loan forgiveness and credit transfers to other schools.

Christine Armario/AP


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Christine Armario/AP


Students wait in front of Everest College in Industry, California, April 2015, hoping to receive their transcripts and information about loan forgiveness and credit transfers to other schools.

Christine Armario/AP

The US Department of Education will waive $5.8 billion in government student loans for those who attended Corinthian Colleges, a chain of for-profit schools that have defrauded students about their placement rates and students’ ability to transfer credit.

According to the ministry, it is the largest student loan repayment in history.

The move, announced on Wednesday, will affect 560,000 borrowers, the education ministry said.

“Financial Exploitation in Wholesale”

In 2015, the Department of Education found that Corinthian had made “widespread and pervasive misrepresentations” about borrowers’ future job prospects, including promises that they would find a job.

The ministry also found that Corinthian had falsified its public job placement rates and misled prospective students about their ability to earn credit.

“For far too long, Corinthian has engaged in the wholesale financial exploitation of students, tricking them into taking on more and more debt to pay promises they would never keep,” said Education Minister Miguel Cardona.

At the heart of Corinthian’s case was then-California Attorney General Kamala Harris, who sued the company in 2013, alleging it employed deceptive and false advertising and recruiting tactics.

The Harris v. Corinthian case helped lay the groundwork for the Department of Education’s 2015 findings against the chain, which allowed cheated students to seek loan cancellation under a provision known as the borrower’s defense.

Since then, the ministry said, around 100,000 Corinthian borrowers have had their debts forgiven through the traditional borrower defense process.

However, with this latest news, the ministry is waiving the need for an application and automatically clearing all remaining federal student loan debt for any borrower who has attended a Corinthian campus.

Affected students don’t need to take any further action to receive a layoff, and the government says it will start notifying borrowers soon.

“This is a tremendous win,” says Eileen Connor, who leads the Project on Predatory Student Lending. “It will improve the lives of so many people. It will end the suffering of so many people. And it’s the right thing. I’m so happy.”

Corinthian Colleges, Inc. was founded in 1995 and later acquired several nonprofit schools across the country.

In 2010, more than 110,000 students were enrolled at its 105 campuses, which included Everest Colleges. But by 2015, Corinthian had either sold or closed all of its locations.

In 2016, Harris and the state of California won a $1.1 billion judgment in her case, including $820 million in student restitution and $350 million in civil penalties.

$25 billion in loan forgiveness so far

This is just the latest — and largest — effort by the Biden administration to provide targeted student loan easing.

In February, the department said for the first time it would grant defense claims from borrowers while the school accused of defrauding borrowers, DeVry University, remained open for business.

The Department of Education has also made it easier for borrowers to reduce their debt through the Public Sector Loan Forgiveness program and a separate loan relief program for borrowers with permanent disabilities — both of which have been the subject of NPR investigations.

Overall, the Biden administration says it has granted $25 billion in loan forgiveness to 1.3 million borrowers.

However, it is not clear what, if anything, this move says about the possibility of broader credit forgiveness.

Pressure has been building on the White House, repeatedly leaking to reporters that Biden may soon announce plans to lend $10,000 per borrower with some income caps. But officially, late last week, the White House insisted that “no decisions have been made yet.”

This story has been updated with new details

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