This past Wednesday, the Biden Administration said it plans to cancel all current student loans for all students who attended any schools operated by Corinthian Colleges. These schools, according to the Department of Education, were one of the largest for-profit education companies, before they declared bankruptcy back in 2015.
Loan Forgiveness
The debt cancellation will cover around 560,000 borrowers and forgive upwards of 5.8 billion dollars in total debt. This would mark the largest single action of debt cancellation ever by the federal government. Any student who has a remaining balance of the debt will be refunded any of their past payments but those who already paid off their loans in full will not receive any money back. For those looking to apply for forgiveness, the application form can be found here.
Why Only Corinthian Colleges?
Corinthian College is an education company founded in 1995 that quickly established over 100 campuses across the country educating students in person, as well as online. They were eventually investigated by the federal government for deceptive advertising by promising students exceptional employment opportunities upon graduation from their program. They also were extremely persuasive in getting students to take on more loans to pay for promises they would never keep. Corinthian eventually filed for bankruptcy in 2015 and is no longer in business.
Broader Student Loan Forgiveness
The Biden Administration has flirted with the idea of forgiving all borrowers $10,000 of their loans for anyone making under $150,000 in salary. While this has been at the forefront of many taxpayers’ concerns for a while now, Congress is still deciding on whether to pursue it or not.
Wrap up
While this is the largest debt cancellation in US history, and it applies to student loans, it does not necessarily signal how Federal debt cancellation for all borrowers will play out. What this does demonstrate, more importantly, is how debt cancellation surrounding student loans is being handled currently. We will continue to keep our eyes peeled for any information about this debt cancellation and Federal student loan cancellation.