The cancellation is the largest single download ever made by the Department of Education.
Some of the former Corinthian students were already eligible for debt cancellation, but the new action will ensure that all borrowers who attended from the founding of Corinthian in 1995 until its closure in April 2015 get a debt relief.
At its peak in 2010, Corinthian Colleges enrolled more than 110,000 students on 105 campuses, including some called Everest, Heald College or WyoTech. The Department of Education has found that Corinthian Colleges deceived prospective students about their ability to transfer credits and falsified their employment rate.
In 2013, Vice President Kamala Harris, who was the Attorney General of California at the time, sued Corinthian Colleges, alleging that the school was misleading and false advertising and hiring. The lawsuit sparked other federal and state investigations that eventually resulted in Corinthian selling most of its campuses in 2014 and closing the rest in 2015.
Political pressure to cancel student debt
Wednesday’s announcement is the Biden administration’s latest and greatest action to cancel federal student loan debt for borrowers who were swindled by their for-profit colleges. The administration has also made it easier for borrowers with permanent disabilities and public sector workers to receive debt relief.
RELATED: Biden is considering canceling a student debt. That’s why it might not be such a great idea. The new announcement raises the total cancellation of student loan debt approved under the Biden administration to $ 25 billion since January 2021. President Joe Biden has also repeatedly extended the pandemic-related payment pause; the expiration date from May 1 to August 31.
But the administration’s fragmented approach to canceling student loan debt doesn’t satisfy many other Democrats who have asked Biden to cancel up to $ 50,000 in student loan debt for each of the 43 million borrowers.
So far, Biden has resisted that pressure, but said he is open to canceling some federal student loan debt. During the campaign, he proposed canceling a minimum of $ 10,000 in student debt per person in response to the pandemic, as well as forgiving all federal student debt related to undergraduate enrollment in public colleges and universities. two and four years for these borrowers. earning up to $ 125,000 a year.
It is not entirely clear that the executive authority of the president will allow him to largely eliminate student debt. Last year, Biden ordered attorneys in the Education and Justice departments to assess whether, in fact, he had the power to generally cancel federal student loan debt. The administration has not disclosed these findings.
But a September 2020 note from attorneys at the Harvard University Center for Legal Services and its Predatory Student Loan Project argues that Congress has given the power to broadly cancel federal student debt in the Department of Education through a law known as the Higher Education Act. It gives the secretary of education the authority “to create and cancel or modify the debt of federal student loan programs,” the note says.
Scammed borrowers receive relief
The struggle to cancel Corinthian student debt began in 2014, when a group of students joined a group called Debt Collective. They organized the first student debt strike in the country, refusing to pay off their student loans.
Former Corinthian alumni will now have their remaining federal student loan debt automatically canceled.
Students who believe they have been scammed by their university are generally required to file what is known as the borrower’s defense to claim the refund from the Department of Education.
The Biden administration has been eliminating a backlog of these allegations that accumulated during the Trump administration. It has now canceled $ 7.9 billion for 690,000 borrowers whose institutions took advantage.
In some cases, such as the action announced on Wednesday, the government has decided that a whole group of students who attended a certain school at certain times should be relieved. Defense groups say they expect Corinthi’s latest action to pave the way for future downloads for groups of borrowers.
“This announcement also sets the stage for future group-wide downloads for other for-profit schools, such as the ITT Tech and Art Institute, and for a comprehensive cancellation of all student debt,” he said. said Thomas Gokey, co-founder of Debt Collective, in a statement.
This story has been updated with additional information.
CNN’s Nikki Carvajal contributed to this report.