Education Department Approves $5.8 Billion Group Discharge to Cancel all Remaining Loans for 560,000 Borrowers who Attended Corinthian

U.S. Department of Education (Department) announced it will discharge all remaining federal student loans borrowed to attend any campus owned or operated by Corinthian Colleges Inc. (Corinthian) from its founding in 1995 through its closure in April 2015. This will result in 560,000 borrowers receiving $5.8 billion in full loan discharges. This includes borrowers who have not yet applied for a borrower defense discharge, who will have their Corinthian loans discharged without any additional action on their part. The action is the largest single loan discharge the Department has made in history. Providing this targeted relief is part of the Biden-Harris Administration’s continued commitment to helping borrowers who are struggling the most by ensuring discharge programs provide borrowers the complete relief to which they are entitled. Today’s action brings the total loan relief the Biden-Harris Administration has approved for borrowers to $25 billion since January 2021.

The announcement today builds upon conclusions first reached by the Department of Education in 2015 that Corinthian engaged in widespread and pervasive misrepresentations related to a borrower’s employment prospects, including guarantees they would find a job. Corinthian also made pervasive misstatements to prospective students about the ability to transfer credits and falsified their public job placement rates. Founded in 1995, Corinthian acquired several troubled private for-profit colleges across the country. At its peak in 2010, it enrolled more than 110,000 students at 105 campuses.

Then-California Attorney General Kamala Harris’ investigation into Corinthian played a key role in developing findings against the for-profit college chain and the Department’s overall work to discharge the loans of borrowers who were harmed by its wrongdoing, a process that has helped cancel the loans of around 100,000 borrowers to date.

“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. “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.”

Vice President Kamala Harris’s History on Holding Corinthian Colleges Accountable

In 2013, Vice President Kamala Harris sued Corinthian when she was attorney general of California, alleging that the company intentionally misrepresented to its students about job placement rates and was engaging in deceptive and false advertising and recruitment. Then Attorney General Harris’ investigation and lawsuit triggered several other inquiries by the Department and other federal and state regulators as well as actions by the Department that ultimately resulted in Corinthian selling most of its campuses in 2014 and closing the remaining ones in 2015.

In 2015, the Department and then-Attorney General Harris released comprehensive findings showing that Corinthian misrepresented job placement rates in programs across the country. Those were the basis of the first borrower defense approvals against Corinthian. It also led the Department to find that the company misrepresented to borrowers who attended its Everest, Heald College, or WyoTech campuses about their ability to find a job using their Corinthian degree. The Department also later found that Corinthian misrepresented students’ ability to transfer credits over the same period at all Everest campuses, except the few that had regional accreditation, the WyoTech campus in Laramie, Wyoming, and for borrowers who enrolled in certain programs at Heald campuses in California. In 2016, then-Attorney General Harris and the state of California obtained a more than $1 billion judgment against Corinthian, in which the judge found that the company misrepresented job placement rates, its program offerings, whether students could transfer credits, among many other false or misleading actions.

The Department will soon begin notifying students who attended Corinthian of this decision, with the actual discharges following in the months after. Borrowers will not have to take any actions to receive their discharges.

The Department would like to thank the Consumer Financial Protection Bureau, as well as the Offices of the Attorney General in California, Illinois, Massachusetts, Wisconsin, and 15 others who shared information that informed the Department’s findings. The Department also acknowledges the extensive work done by many former Corinthian students to raise attention to the problems at the institution and the need for a process to grant relief for those harmed. Finally, the Department would also like to thank the Federal Student Aid Borrower Defense Group and the Administrative Actions and Appeals Service Group in the Department’s Federal Student Aid office and the Department’s Office of the General Counsel, for their work on the Corinthian findings.

Continued Commitment to Targeted Relief

Today’s action is part of the Department’s broader goals to ensure better implementation of the student loan programs to get students and borrowers the benefits to which they are entitled, including loan discharges. These goals also include enacting lasting policies to make loans more affordable and prevent a future debt crisis by holding colleges accountable for leaving students with mountains of debt and without good jobs.

Including this group discharge, the Department has now approved $25 billion in loan forgiveness for 1.3 million borrowers. This includes:

• $7.9 billion for 690,000 borrowers whose institutions took advantage of them through discharges related to borrower defense and school closures.
• $7.3 billion for more than 127,000 borrowers through Public Service Loan Forgiveness (PSLF).
• More than $8.5 billion in total and permanent disability discharges for more than 400,000 borrowers.

The Department also recently announced fixes to long-standing problems in income-driven repayment that will help thousands of borrowers receive forgiveness through that program as well as 40,000 borrowers who receive PSLF.

The Department is also working on new regulations that will permanently improve a variety of the existing student loan relief programs, significantly reduce monthly payments, and provide greater protections for students and taxpayers against unaffordable debts.