Biden administration cancels $5.8B in student loan debt
Federal student loans for 560,000 borrowers who attended Corinthian Colleges will be forgiven
The Education Department said it canceled an unprecedented level of student debt for 560,000 borrowers who attended a now-closed college. (iStock)
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.
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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."
If you're a private student loan borrower, refinancing could help you lower your monthly payments on your loans. To see if this is the right option for you, contact Credible to speak to a student loan expert and get all of your questions answered.
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