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Former Corinthian students get federal student debt forgiveness

WASHINGTON — Hundreds of thousands of students who attended the for-profit Corinthian Colleges chain will automatically cancel their government student loans, the Biden administration announced Wednesday, a move aimed at ending one of the most notorious frauds in American higher education.

Under the new promotion, everyone who participated in the now-defunct chain from its inception in 1995 to its collapse in 2015 will have their federal student debt paid off. It will forgive $5.8 billion in debt for more than 560,000 borrowers, in what the agency says is the largest single loan relief in the Department of Education’s history.

“Starting today, any student who is being deceived, cheated and pushed into debt by the Corinthian Colleges can rest assured that the Biden-Harris administration has their back and will pay off their state student loans,” Secretary of Education Miguel Cardona said. “For far too long, Corinthian has engaged in the wholesale financial exploitation of students, leading them to take on more and more debt to pay promises they would never keep.”

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Tens of thousands of former Corinthian students were already eligible for debt relief, but they had to submit paperwork and go through an application process that advocates say is confusing and not widely known. The relief will now be carried out automatically and extended to other borrowers.

Those who have a balance of their Corinthian debts will also receive refunds for payments already made, Education Ministry officials said. However, the promotion does not apply to loans that have already been fully paid off.

At its peak, Corinthian was one of the nation’s largest for-profit college companies with more than 100 campuses nationwide and more than 110,000 students at its Everest, WyoTech, and Heald schools.

But the company shut down in 2015 due to widespread fraud findings. The Obama administration — working with Kamala Harris, then California Attorney General and later Vice President — found that dozens of universities were falsifying data on the success of their graduates. In some cases, schools reported that students had found jobs in their majors despite working in grocery stores or fast-food joints.

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Hundreds of students told investigators they were pressured into enrolling with promises of lucrative employment, only to end up with huge amounts of debt and slim job prospects. Federal officials also found that the company incorrectly told students that their coursework could be transferred to other colleges.

The case sparked a federal crackdown on for-profit colleges, and the Obama administration vowed to forgive Corinthian students whose programs had lied about job placement quotas. The administration extended a procedure known as borrower defense to repayment, which allows any cheated student to seek debt relief.

But an explosion of debt relief requests, along with political infighting over the process, caused a years-long backlog in the process, leaving many former Corinthian students still waiting for relief.

By December, the Department of Education reported it had more than 109,000 outstanding applications from students alleging fraud by their colleges, including many Corinthian students. Borrowers and their advocates have urged the government to forgive all of Corinthian’s debts, saying evidence of wrongdoing was so widespread that all of the chain’s students were victims of fraud.

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The administration announced the action Wednesday as President Joe Biden considers broader student loan relief for millions of Americans. As a candidate, Biden said he supports forgiving $10,000 in student loans to all borrowers. He later hinted that such action should come through Congress, but the White House said he was considering pursuing it through executive action.

Supporters said the Biden administration’s decision will bring long-delayed justice.

“This is a tremendous student victory and belongs to the tens of thousands of borrowers who have been defrauded and abused by Corinthian colleges,” said Eileen Connor, director of the Project on Predatory Student Lending, which has represented Corinthian students in court cases. They have never stopped fighting across three governments for the justice they deserve under the law.”

Libby DeBlasio Webster, senior counsel for the Student Defense advocacy group, said the news gives former Corinthian students a “fresh start,” but she noted that many betrayed students from other for-profit colleges are still waiting for help.

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“We also hope that today’s news is a sign that other choices are on the horizon for the thousands of similarly situated students waiting for that kind of relief,” she said.

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The Associated Press education team is supported by the Carnegie Corporation of New York. The AP is solely responsible for all content.

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https://www.local10.com/news/politics/2022/06/01/former-corinthian-students-get-federal-student-debt-erased/ Former Corinthian students get federal student debt forgiveness

Sarah Y. Kim

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