Hundreds of thousands of students who attended the for-profit school Corinthian colleges chain automatically have their federal student loans canceledsays the Biden administration.
The Associated Press reports that people who frequented the now-defunct channel from its founding in 1995 until its collapse in 2015 will have their federal student debt erased. This decision will erase $5.8 billion in debt for more than 560,000 borrowers.
Tens of thousands of former Corinthian students were already eligible for debt forgiveness, but had to file paperwork and navigate an application process that advocates say is confusing. From now on, the relief will be made automatic and extended to other borrowers.
Those with a remaining balance on their Corinthian debt will also get refunds on payments already made. But the action does not apply to loans repaid in full.
At its height, Corinthian was one of the largest for-profit university enterprises. It had over 100 campuses and over 110,000 students at its Everest, WyoTech and Heald schools.
The company closed in 2015 following widespread discoveries of fraud.
The Obama administration found that dozens of campuses falsified their graduate achievement data. In some cases, schools reported that students found jobs in their field of study even though they worked in grocery stores or fast food chains.
Students often told investigators they had been pressured into enrolling with promises of lucrative employment, only to end up with huge debts and few job prospects. Federal officials discovered that the company had falsely told students that their course credits could be transferred to other colleges.