The U.S. Department of Education on Wednesday said it will cancel all remaining federal student loans used to attend any campus of for-profit Corinthian Colleges Inc, which shut down in 2015 amid multiple federal and state investigations into whether it misled investors and students.
The decision, which Vice President Kamala Harris will discuss publicly Thursday, will result in $5.8 billion in loan forgiveness for 560,000 borrowers, the largest single such move ever made by the department, department officials said.
The department was investigating problems at other institutions, and this could lead to loan discharges for more students cheated by their colleges, a senior official told reporters.
"The reality is that far too many students have been left worse off than if they had never gone to college at all," a second official said, citing "troubling racial disparities."
Harris sued Corinthian when she was California attorney general, alleging the Santa Ana, California-based company intentionally misled students about job placement rates and engaged in deceptive advertising and recruitment.
Corinthian, which operated the Heald College, Everest, and WyoTech schools and offered degrees in healthcare and trades, filed for bankruptcy in May 2015, 20 years after its founding.
At its peak in 2010, Corinthian enrolled more than 110,000 students at 105 campuses.
The department's move will cancel outstanding loans. Borrowers who have not paid off their debt will receive refunds of past loan payments, officials said. But borrowers who fully paid off their loans will not receive refunds, they said.
Borrowers would not have to take any action to receive the money, they added.
Officials said they continued to study broader student debt relief options. To date, the department has approved $25 billion in loan relief for 1.3 million borrowers since January 2021 for a variety of reasons.
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