The Department of Education announced Wednesday that it will cancel an unprecedented amount of student debt for students who attended one for-profit institution.
The
department approved $5.8 billion in full loan discharges for 560,000 borrowers
who attended a campus owned or operated by Corinthian Colleges. This "is
the largest single loan discharge" in the history of the department.
Vice
President Kamala Harris' investigation into Corinthian, which was conducted
during her time as California’s attorney general, "played a key role in
developing findings against the for-profit college chain," the department
said.
"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 in the announcement. "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.
"While
our actions today will relieve Corinthian Colleges' victims of their burdens,
the Department of Education is actively ramping up oversight to better protect
today's students from tactics and make sure that for-profit institutions – and
the corporations that own them – never again get away with such abuse,"
Cardona continued.
While
this debt cancellation is for borrowers of federal student loans, those with
private student loans who are looking to lower their monthly payments could
consider refinancing. Visit Credible to find your
personalized interest rate without affecting your credit score.
Student loan relief under Biden admin rises to $25 billion
The Education Department's
announcement follows conclusions it said it came to in 2015, including "that Corinthian
engaged in widespread and pervasive misrepresentations related to a borrower’s
employment prospects."
This round of forgiveness applies to "all remaining federal student
loans" for borrowers who studied at Corinthian Colleges from its founding
in 1995 through its closure in April 2015. It brought the total amount of
student loan relief under the Biden administration to $25 billion since January
2021.
The Department of Education has
discharged these student loans through the following student loan forgiveness
programs:
Total and permanent disability
discharge
Public Service Loan Forgiveness
Borrower defense to repayment
Closed school discharge
While a significant portion of the
population has benefited from federal student loan forgiveness, about 43
million federal borrowers still owe a total of $1.6 trillion worth of college
debt, according to the Education Data Initiative. That's an average
balance of $37,014 per federal student loan borrower.
Private student loan borrowers looking
to reduce their loan balance may want to consider refinancing. Doing so could
help you lower your interest rate and allow you to put more money toward the
principal balance. You can visit Credible to compare multiple student loan lenders at
once and choose the one with the best interest rate for you.
Advocates continue calls for Biden to cancel student loan
debt
While the Biden administration has not
implemented broad student loan forgiveness, the president has hinted that a decision could be
forthcoming. Biden told reporters at the White House in early May that although
he's considering some student debt cancelation, he wouldn't consider a
reduction of $50,000 per borrower. But advocates have continued to push for an
executive action to cancel more federal student debt.
"We applaud President Biden and
Vice President Harris for this move," Whitney Barkley, the Center for
Responsible Lending's senior policy counsel, said. "Tens of thousands of
former Corinthian students who had been defrauded by their school, and left
wondering for years how they’d recover the money they lost, are now at ease.
The administration now needs to immediately cancel $50,000 of student loan debt
per borrower and abandon its piecemeal approach to cancellation.
"While historic, the relief provided to Corinthian students represents only a tiny fraction of students who need cancellation," Barkley said. "Millions of low-income borrowers and borrowers of color continue to carry the burden of an unforgiving student loan crisis."
Source:foxbusiness