Debt Forgiveness Takes One Step Forward in the United States

The Department of Education is making moves to eliminate debt from more than 560,000 borrowers, totaling $5.8 billion, as announced on Wednesday. According to the Department of Education, this will be the largest one-time Discharge ever. This student loan forgiveness is applying to Corinthian College, which was founded in 1995 and ultimately fell in 2015, attendees of this now-defunct College will have their debt erased.

Corinthian Colleges in 2010, at 105 campuses held approximately 110,000 students. As well as receiving students from Everest, Heald College, and WyoTech. Corinthian Colleges was caught misleading students in their means to transfer credits and lied about its placement rates for jobs. In 2015 the college was closed due to sweeping fraud findings.

“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.” Said Miguel Cardona Education Secretary on Wednesday

Former California attorney general now Vice President Kamala working with the Obama administration discovered a multitude of campuses falsifying graduation success rates in their data. Despite the fact, that students were found working at grocery stores and fast-food chains the schools falsely reported that they were able to find jobs in their field of study.

Confusing paperwork complicated and commonly unknown process for some of the students of were previously eligible for debt cancellation. The process will now be streamlined and automatic. Any remaining debt will be paid back on what they’ve already paid. Despite that, this same forgiveness will not be extended to individuals who already paid their Corinthian debt fully off.

During the Trump administration, partial cancellation of loans was offered only as an incremental form of cancellation. The defrauded students were given even lower amounts of relief if their income was higher. The students sued over these changes. The policy was stopped by a federal judge and ordered the Education Department to no longer collect debt payments.

Investigators shared accounts by students who pointed out that they were pushed with false promises of fruitful employment opportunities, but were simply met with enormous debt with not many job choices. The company was found by federal officials to have lied to their students about their ability to transfer their credits to other colleges.

In a statement, by former Everest Institute’s Los Angeles campus Nathan Hornes, the student recalls how during their final exams the class was instructed to play a board game. Saying that it was an “absolute joke of a school,” in a statement he added “My sister and all the others who went through the same experience of being cheated by Corinthian finally get to experience the same relief of having the financial burden lifted.”

Written by Skye Leon
Edited by Sheena Robertson

Sources:
CBSNews: Biden administration cancels $5.8 billion in student debt for people who attended for-profit college
APNews: Student loan debt wiped clean for former Corinthian students; By Collin Binkley
CNN: Biden administration cancels $5.8 billion in student loan debt for former Corinthian students: By Katie Lobosco

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Inset Image Courtesy of Steve Rhodes‘s Flickr Page – Creative Commons License