The Education Department announced that it is canceling the debt of hundreds of thousands of student borrowers in its largest-ever loan cancellation.
Around 560,000 students who attended schools affiliated with Corinthian Colleges stand to profit from the debt forgiveness, which stands at $5.8 billion.
Formerly one of the largest for-profit education companies, Corinthian Colleges faced multiple lawsuits for illegal recruiting tactics, inferior educational programs, and false promises to students about their career and potential income prospects.
“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,” Secretary of Education Miguel Cardona said.
The relief would be automatic, officials added, meaning borrowers do not need to apply or navigate other paperwork to have their debts canceled. Students and families are expected to be notified within the next few weeks.
“Many borrowers have been waiting for years and years for their applications to be processed,” higher education expert Mark Kantrowitz told CNBC. “They’ll no longer be waiting in limbo.”
‘Watershed Moment’
During his campaign, President Biden promised to address the burden of student loans and now faces pressure from students and Democratic lawmakers to cancel the country’s trillion-dollar loan debt.
The latest announcement comes on the heels of a Washington Post report that the government is on the verge of providing $10,000 in loan forgiveness for student borrowers across the country.
Borrowers and advocates welcomed the decision as a “watershed moment” in higher education.
“It’s really hard to overstate how transformative this is going to be for hundreds of thousands of people,” activist group founder, Thomas Gokey, told The New York Times.