This week, the United States Department of Education (DOE) declared that it would cancel all of the remaining federal student loans for individuals who attended Corinthian Colleges, Inc., a for-profit college chain. The college chain shuttered its operations in 2015 following numerous state and federal investigations regarding whether or not it misled students and investors.
The closure emerges two decades after the company’s founding.
As a result of this decision, $5.8 billion in loan forgiveness will be extended to 560,000 borrowers, in a possible sign of trends to come. To date, this decision represents the largest move ever undertaken by the federal agency.
The DOE is also in the process of investigating various issues at other universities, which could lead to discharging loans for other students who may have been cheated by their colleges, per a senior official with the department.
Various schools under the Corinthian banner include Everest, WyoTech, and Heald College. Popular degrees included healthcare and varied trades.
At the highest point in its enrollment, in 2010, Corinthian had 110,000 students spread across 105 different campuses.
The DOE intends to cancel all remaining loans, and it will also provide refunds of past loans paid to borrowers who remain in debt. However, for borrowers who have fully paid off their debt to Corinthian, they will not receive any refund whatsoever. In other words, individuals who responsibly paid off their debts will receive no compensation whatsoever, whereas others who did not have all their debt forgiven, meaning that individuals who fully satisfied their debts effectively lost money.
In addition, borrowers who still have outstanding debt will not need to take any special action to receive their refund.
Officials with the department are continuing to examine other ways to forgive student debt. Since January 2021, at least $25 billion in debt relief for 1.3 million borrowers has been extended for varied reasons.