IBL News | New York

The Biden administration said this week it would cancel all loans held by 560,000 students who attended the former Corinthian Colleges, one of the nation’s largest for-profit college chains, before it collapsed in 2015. after being found guilty of defrauding students.

This debt amounts to $5.8 billion and is the largest debt cancellation ever made by the federal government. This discharge from Corinthian College is twenty times larger than the beauty schools of Marinello, a predatory for-profit organization that deceived 28,000 students.

“For too long, Corinthian has engaged in the large-scale financial exploitation of students, driving them into deeper and deeper debt to pay for promises they would never keep,” said Education Secretary Miguel Cardona. Corinthian colleges deceive students about job placement prospects after graduation.

Vice President Kamala Harris yesterday announced the group’s discharge.

In 2013, then-California Attorney General Kamala Harris sued Corinthian for using fraudulent advertising and other predatory practices.

At its peak, Corinthian had over 110,000 students at 100 campuses across the country.

In 2015, the Department of Education joined the investigation and fined the organization $30 million. This event sent Corinthian into bankruptcy, closing its 28 campuses with 16,000 students.

Later, more than 1,000 students went on strike, refusing to repay their student loans.

Today, the Biden administration will automatically cancel student debt. Borrowers will even be refunded on past payments if they still have an outstanding balance. On the other hand, borrowers who have fully repaid their loan will not be reimbursed.

Borrowers and their lawyers celebrated the Corinthian decision as a watershed moment.

However, former education secretary Bill Bennett called the debt forgiveness “regressive” and a “mistake”. “Now the Corinthian colleges were a scam, and they were scamming a lot of students. They deserve some punishment and some accountability, but that doesn’t mean the taxpayers have to pay for it, which is what we’re doing here.” he added.


Federal Reserve Bank of San Francisco


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