Jun 1, 2022 - Economy

Education Dept. cancels student debt for borrowers defrauded by Corinthian Colleges

Shawna Chen

Photo of Miguel Cardona speaking from a podium as a flag with the Education Department seal in the back — Education Secretary Miguel Cardona delivers remarks on Jan. 27 in Washington, D.C. Photo: Chip Somodevilla via Getty Images

The Department of Education announced Wednesday that it will discharge all remaining federal student loans borrowed to attend campuses owned or operated by Corinthian Colleges.

Why it matters: Corinthian Colleges closed in April 2015 after facing multiple investigations and lawsuits for defrauding students. Wednesday's move, which the department called the largest single loan discharge in its history, will provide relief to 560,000 borrowers and amounts to $5.8 billion in full loan discharges.

It also comes as the Biden administration faces increasing pressure to cancel student debt.

What they're saying: "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," U.S. Secretary of Education Miguel Cardona said in a statement.

"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."

Worth noting: Vice President Kamala Harris played a critical role in investigating Corinthian in her capacity as California's attorney general, the department said in a press release.

In 2016, a judge found that the company misrepresented job placement rates, its program offerings and transfer credits, among others.

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Education Dept. cancels student debt for borrowers defrauded by Corinthian Colleges

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