What happened with the $5.8 billion in federal student loan forgiveness for former Corinthian Colleges students

The U.S. Department of Education announced in 2022 that it would discharge all remaining federal student loan balances for former Corinthian Colleges students. The $5.8 billion in forgiveness will impact 560,000 students once it is fully implemented, and has been the largest single act of debt forgiveness the government has ever enacted.

Former Corinthian students to receive automatic loan forgiveness

Students who attended any campus owned or operated by Corinthian Colleges are slated to have their remaining federal student loans discharged, putting an end to years of deliberation over Corinthian’s alleged fraudulent behavior.

This action, once fully enacted, will result in 560,000 borrowers receiving $5.8 billion in full federal loan discharges. It is applicable to every former student of institutions owned by the company, including former students who haven’t applied for borrower defense. Some students may also be eligible to have previous payments refunded. These student loan discharges are expected to  be automatically applied. Though they were announced as automatic, slow rollout means some borrowers may need to wait until 2024 to see updates reflected on their student loan accounts.

“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,” said U.S. Secretary of Education Miguel Cardona in a 2022 press release. He added that the administration would also increase its accountability for for-profit institutions to ensure that similar abuse wouldn’t occur in the future.

Forgiveness comes after years of lawsuits around Corinthian Colleges

Corinthian Colleges closed its doors for good in 2015 after it was denied access to federal funds. Even before its closure, the company was subject to criticism, with many saying that it forced students into debt while misrepresenting future job prospects and the ability to transfer credits. The company underwent several investigations and lawsuits, including one by then-Attorney General of California Kamala Harris, one by the Department of Education and one by the Consumer Financial Protection Bureau (CFPB).

While the CFPB lawsuit resulted in $480 million in forgiveness, not every student qualified. In 2015, a group of former students known as the Corinthian 15 launched a “debt strike” with the aim of getting their debt canceled through borrower defense to repayment. Loan cancellation was promised, but the actual discharges weren’t rolled out until Biden took office.

Roughly 100,000 former students had received a discharge of their student loan debt prior to the summer 2022 announcement, but that action by the Education Department lined up all remaining student debt for the school to be forgiven.

The Biden administration hopes to prevent more cases like Corinthian in the future

The administration stated that its mid-2022 round of student loan discharges would not be the end of its work. In addition to improving the implementation of existing student loan programs, the department stated an intention to “prevent a future debt crisis by holding colleges accountable for leaving students with mountains of debt and without good jobs.”

While Corinthian Colleges remains one of the biggest cases of misconduct, it’s not the only one. Just in recent years, the Education Department has canceled large swaths of debt for former students of Marinello, ITT Tech and the Court Reporting Institute.

If you’ve attended a school outside of Corinthian and you believe that you’ve been misled or defrauded, visit the Department of Education’s website to apply for borrower defense.